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Or Avi-Guy

Israeli industry has received another vote of confidence, this time from near-legendary American business mogul and philanthropist Warren Buffett, the chairman and CEO of Berkshire Hathaway.

Buffett recently completed the acquisition of the last 20% of the Israeli company Iscar (IMC) for US$2 billion – twice the value of the shares offered during the first stage of the transaction in 2006. According to reports, Iscar, managed by the Israeli Wertheimer family, has doubled its profits since its original purchase by Buffett in spite of the global financial crisis of recent years. Furthermore, Buffet made it very clear that he thinks very highly not only of Iscar, but of the Israeli economy as a whole – and especially the entrepreneurship and innovation of the Israeli population.

Iscar develops and manufactures specialised cutting tools for industries and blades for airline companies. It was established by Israeli businessman Stef Wertheimer and its CEO is his son, Eitan Wertheimer (now retiring). Iscar employs 2,500 workers in Israel, and another 7,500 employees world-wide.

In 2006, Buffett bought 80% of Iscar for US$4 billion. At the time, it was the largest acquisition by Buffett outside the US, and the largest acquisition of any Israeli company ever.

Buffett stated that

“since IMC (Iscar) entered our lives, my partner Charlie Munger and me have enjoyed the partnership with the company, with the Wertheimer family and with the management of Iscar. As you can see by the price which we pay for the remaining shares, IMC experienced significant growth in the past 7 years, and we are pleased to buy the second part of the company that remained in the hands of the Wertheimer family when IMC first became a member of the corporation group of Berkshire. We are looking forward to continue working with this unique company, which was established in Israel by the Wertheimer family 60 years ago, and became a true global corporation.”

Eithan Wertheimer added that

“we are happy that Iscar found a permanent home with Berkshire Hathaway, which truly appreciates the unique nature of the international Israeli corporation we have established, and which is committed to preserve this heritage in any way, and even builds and continues the historical success and our unique culture … the growth experienced by IMC since the deal with Berkshire in 2006 reflects the confidence Warren and Charlie had in our business, and in the people who work in Tefen [the Israeli location of IMC facilities] and around the world, who made our success possible. We are certain that the vision of Miriam and Stef Wertheimer, which continued in the second generation of the family. will continue to promote the company as part of the Berkshire Hathaway family…”

Buffett also praised Israel, and Israeli industries,Yisrael Hayom reported:

“Israel is a good place for investment because of its people. There is no other place like it on earth where you can find people with such qualities, with motivation and with the ability to focus, like in Iscar,” he said, later adding that “Israel should continue doing what it’s doing. You are a nation of entrepreneurs with incredible abilities. They need to continue being provided with the best and most convenient conditions, therefore it is the responsibility of the government, which creates a good climate for entrepreneurs.”

Eitan Wertheimer also commented on how the deal reflects the potential for investment in Israel’s advanced industries and technologies:

“The most respected and important investor in the world is voting with his feet. Israel is a good place for investment.” In another statement he added that “Warren Buffett’s investment in Israel is a huge vote of confidence in the company, and in the State of Israel… it is the largest investment ever in an Israeli company, and if Buffett says that it is his best investment – it is not because of our pretty eyes.”

Buffett has previously stated that buying IMC from the Wertheimer family was one of his best acquisitions. In his annual letter in February 2012 to Berkshire Hathaway shareholders Buffett wrote that “the cutting tools company, of which we own 80%, continues to amaze us. The growth in sales and overall performance of the company are unique in its industry.”

Wertheimer also repeatedly offered reassurances that even after the deal, Iscar will stay in Israel:

“it is not easy for us, but it’s the way of the world and this is an opportunity to pass on the company… the most important thing to us is that Buffett promised that as long as he is alive… Iscar will not leave Israel’s borders…This has always been Stef’s dream – a company that manufactures and grows in Israel, and will create work opportunities.”