Warren Buffett Bought Israeli Mind for $ 4 Billion in Cash
In what is perceived to be a vote of confidence in the Israeli economy by one of the world's wealthiest entrepreneurs, billionaire investor Warren Buffett is acquiring 80 percent of Iscar Metalworking Companies, owned by the Wertheimer family, for $ 4 billion in cash. This is Buffett's first major acquisition outside the United States.
The acquisition of Iscar Metalworking by the biggest private investor in the world is a declaration of confidence in the Israeli economy that is worth billions, more than any declaration by any minister of finance and more than any plan to boost growth and employment. When Buffett told Wertheimer that Iscar is "the best company I've bought," he made it easier for any board of directors anywhere in the world to invest here in Israel because "if Buffett invested, we can too."
This isn't just talk, it is real money. And when Buffett puts down billions in cash on the barrel, he plans to make money. He plans to see Iscar grow faster and become even more profitable than it is today. Businesspeople the world over hear the news and understand it is worth investing here, Israel is not just Qassam rockets and artillery in the Gaza Strip, but also magnificent industry and a growing economy.
Buffett, considered the most talented investor in the world, appeared last week on stage with Eitan Wertheimer before an estimated 25,000 attendees of Buffett's annual meeting in his hometown of Omaha, Nebraska. The American billionaire rarely makes public appearances, so many see this meeting as a golden opportunity to receive investing tips. Investors all over the world closely follow the progress of companies in which Buffett invests as well as his statements and opinions regarding long-term global economic projections and analysis.
Warren Buffett - Reuters
Buffett is a god of investment and money in the U.S. Thousands of his shareholders met in Nebraska to hear the guru explain his strategy, and why he bought Iscar in a tiny Mideast country that he's never visited. Investors asked him tough questions, he answered, and every word out of his mouth is printed in the major newspapers across the U.S.
Privately held Iscar is the world's leading manufacturer of precision carbide metal working tools. Buffett, whose estimated worth of $40 billion places him as the second richest man in the world behind Microsoft's Bill Gates, believes in Iscar management. All senior members are expected to remain at their jobs.
There is no reason to fear the closure of Iscar factories in Israel. Buffett knows he bought the Israeli mind, Israeli management and Israeli knowhow. That is what is special about Iscar: people educated for excellence. Without them, the factory isn't worth much. So there is no reason to fear layoffs. They won't happen - in contrast, there will be growth and expansion.
The stunning price paid for Iscar indicates it is possible to make big money in basic industry too, not just electronics. Stef Wertheimer started doing that in 1948 when he established a small factory to manufacture aircraft engine blades. Later moving into the manufacture of metal-cutting tools for the automobile and aviation industries. His son Eitan made the company a multinational based on advanced robotics, with tremendous productivity per employee. "Buffett is buying the education our people got at the factory over many long years," Stef Wertheimer said proudly.