Buffet Buys Israeli Military Electronics Company

Ray-Q, which helped develop Israel’s Iron Dome and Arrow military systems, will keep its operations in Israel as part of a deal expected to increase global sales.

Israeli military electronics company Ray-Q Interconnect was bought last week by United States-based electronic components distributor TTI , a wholly owned subsidiary of billionaire investor Warren Buffet’s Berkshire Hathaway.

The deal was fairly straightforward and carried out with little fanfare. The acquisition price, along with Ray-Q's sales figures and profitability, were not made public, at the request of TTI.

But it was almost certainly much smaller than the heavily publicized $6 billion purchase of Israeli cutting tools manufacturer Iscar, in which Berkshire Hathaway took a controlling stake in the company in 2006 and purchased the remaining shares earlier this year.

Ray-Q, which was founded in 1969 and is headquartered at Airport City, near Ben-Gurion International Airport, supplies connectivity equipment and participates in planning the development of new products in the military and aerospace industries, and serves as representative and distributor for other connectivity component suppliers in Israel, Turkey, India and Eastern and Central Europe. For example, it works with Rafael Advanced Defense Systems in developing and manufacturing the Iron Dome short-range missile defense system and with Israel Aerospace Industries in developing the Arrow anti-ballistic missile.

“We aren’t manufacturers,” said longtime Ray-Q CEO Yigal Funt. “We are military components importers who adapt [equipment] to customer’s needs.”

Ray-Q’s operations will stay in Israel after the sale goes through, and its management is obligated to stay on at the company, which has 70 employees in Israel and branches in Turkey and India, for at least another three years. No layoffs are expected.

Funt expects that the acquisition of Ray-Q will help dramatically increase its sales around the globe due to TTI’s connections, given that TTI supplies electronic components to the military and aerospace industries. “They have a broader range of products, and we will work with them,” he said.

Gene Conahan, president of TTI Europe and Asia, said the acquisition of Ray-Q will allow the company to provide its clients with added value in the area of electrical system planning. TTI was founded in 1971 and acquired by Berkshire Hathaway in 2007. It has more than 3,000 employees around the world.

The first step toward selling Ray-Q was a meeting at an international exposition, when TTI expressed interest in acquiring Ray-Q, said Funt. Both companies agreed on the sale in principle four months ago.

“There were no arguments over the price,” Funt said. “We received very close to what we asked.”

He said the acquisition also made sense in terms of organizational culture.

“They are very pleasant people; their management culture is very similar to our own, so bringing the two together is going very well,” Funt said. “Their culture is based on listening to the customer and his needs, and they act accordingly as well.”

Reuters