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Israel Investment News - May, 2006

As a public service, Arutz Sheva provides below the May newsletter from the Finance Ministry's Investment Promotion Center.
By IsraelNN Staff
First Publish: 5/31/2006, 1:17 PM / Last Update: 5/31/2006, 1:20 PM

ONE OF AMERICA'S GREATEST INVESTORS WARREN BUFFETT IN HIS LARGEST INVESTMENT OUTSIDE U.S., BUYS 80% OF ISCAR FOR $4 BILLION

Buffett: "Iscar is an amazing company run by amazing people. I don't get many opportunities to invest in companies like that."

Warren Buffett, labeled the biggest investment guru of all time and his investment company Berkshire Hathaway Inc. announced an agreement to buy 80% of Israeli company Iscar Ltd. for $4 billion.

Iscar Metalworking Companies (IMC) is an industry leader in the metal cutting tools business through its Iscar, TaeguTec, Ingersoll and other IMC group companies. It is owned by the Wertheimer family with operations worldwide. The deal is the largest acquisition ever by Buffett outside the U.S. and the third largest investment ever made by Berkshire.

Buffett said that his investment in Iscar and its management would prove to be one of the most significant things Berkshire had ever done. Talking about Israel, Buffett said that Israel has "amazing people. We are investing $4 billion in an amazing group of people from Israel – and we are investing it at an astounding speed."

The company will continue to be managed by its current management team, headed by Chairman Eitan Wertheimer and President and CEO Jacob Harpaz with headquarters remaining in Tefen, Israel.

Expressing interest in investing in additional Israeli companies, Buffett commented that he is waiting for calls from Israeli companies that meet his criteria.

MORGAN STANLEY LABELS ISRAELI ECONOMY "ALMOST PERFECT"

Investment bank releases glowing report on Israeli economy

In a review on the Israeli economy entitled "Israel, Almost Perfect", U.S. investment bank Morgan Stanley predicted the Bank of Israel's key rate will rise to 5.75% in 2006. The report said that "Israel's new government is good news from the economy and financial markets. The formation of a 'grand' coalition…in the Knesset is a positive development and will help maintain economic stability."

6.6% GROWTH IN ECONOMY IN FIRST QUARTER

Citigroup sees average growth exceeding 4%

A report showed the economy grew 6.6% in the first quarter of 2006, compared with 5.2% in the same period of 2005. The results exceeded previous forecasts. Investments in fixed assets grew by an annualized 16.3%, business product rose by an annualized 10.6% and investments in machinery and equipment rose by 20%. In response to the first quarter figures, Citigroup analysts predict that the average growth for 2006 will be higher than its 4% previously predicted.

NASDAQ TO LAUNCH INDEX OF ISRAELI COMPANIES

Israeli stock index to be the first foreign index on Nasdaq

Nasdaq International Vice President for EMEA, Charlotte Crosswell said that the Nasdaq will launch an Israeli stock index within the next few months. The companies on the index will be weighed on the basis of their market capitalization. This will be the first ever foreign index on the Nasdaq, with Israel boasting more companies listed than any country outside North America.

RED HERRING'S TOP 100 EUROPEAN LIST INCLUDES 17 ISRAELI COMPANIES

Israel ties 2nd place for the largest number of companies on the list

Israel tied with France in the second largest number of companies, after Britain to be listed on Red Herring's top European 100 private technology companies. The companies, judged on innovation and entrepreneurial activities, include D-Pharm, BiolineRX, BitBand, Genova, Altair Semiconductor, Axerra Networks, cVidya Networks, Discretix Technologies, Double Fusion, Gteko Technologies, Negevtech, Power Paper, Siano Mobile Silicon, SpeedBit, Targetize Innovative Solutions, Xeround and Voltaire.

MICROSOFT ANNOUNCES BUYS ISRAELI WHALE COMMUNICATIONS

Microsoft Israel's VP R&D: Microsoft plans to turn the start-up into another Israeli R&D center

Microsoft announced plans to acquire secure sockets layer (SSL) and virtual private networks (VPN) vendor Whale Communications. Whale was listed in international accountancy firm Deloitte Touche’s “Europe Fast 500” list of top companies in 2005. Whale marks Microsoft's first acquisition of an Israeli company since 2001.

BMC SOFTWARE INTERESTED IN FURTHER INVESTING IN ISRAEL

The company's investments in Israel are considered its largest outside the U.S

On a visit to Israel, BMC President and CEO Bob Beauchamp announced that BMC Software would continue investing in Israel on top of the billion dollars it had already spent. Beauchamp was in Israel with other company executives celebrating the company's recent acquisition of Identify Group for $150 million. Jim Grant, the Vice President of BMC Software Service Management Business Unit said that the company's investments in Israel are its largest outside the U.S.

"Our Tel Aviv facility is particularly important because the mainframe talent and technology that we have there is not easily found around the world… We have had tremendous success here and (with) the products they produce and the great technology environment that exists in Israel," he said.

CAPITAL INTERNATIONAL INVESTMENT GROUP TO ENTER ISRAELI MARKET

Company establishes fund with Pekan Plus Mutual Funds

Capital International, an investment group with over $300 billion under management, announced it would establish a mutual fund in Israel. This marks the company's first entry into the Israeli market. Capital International signed an agreement with Tel Aviv based Pekan Plus Mutual Funds. The fund will specialize in investments in the US share markets for its Israeli clientele.

IBM ACQUIRES ISRAELI UNICORN SOLUTIONS

Company listed on Red Herring's 100 leading start-ups for 2005

Unicorn Solutions, developers of software for metadata management is being acquired by IBM. The company is based in Jerusalem with a presence in New York.

Unicorn is included in Gartner Group's "visionary quadrant" within its high-level evaluation criteria "Magic Quadrant" and was listed on Red Herring's 100 leading start-ups in 2005. Its employees will join the IBM R&D laboratory in Israel.

FOREIGN DIRECT INVESTMENT REACHES $1.72 BILLION IN MARCH-APRIL

Hi-tech , industry and real estate benefit from investment

The Bank of Israel reported that total direct foreign investment and investment in Israeli securities totaled $1.72 billion for the months of March and April. The hi-tech, industry and real estate sectors benefited most from the investment.

STANDARD AND POORS AND MOODY'S CAST CONFIDENT VOTE ON ISRAELI ECONOMY

"Israeli society and its political and economic decision-makers have shown remarkable resiliency," reported Moody's

Both Moody's Investor Services and credit rating company Standard & Poors (S&P) granted a vote of confidence in the Israeli economy. Moody's Investor Services upgraded its outlook for its international market rating for Israel to "positive". "Israel is exhibiting considerable growth of GDP per capita, moving towards a level more often associated with advanced economies than with developing ones," said the report.

In addition, announcing its credit ratings, S&P retained its A- rating for Israel. It reaffirmed the outlook remains stable.

WARREN BUFFETT INVESTS FURTHER IN ISRAEL

AgroLogic and Cellulogic acquired by Berkshire Hathaway

Buffett's Berkshire Hathaway Group announced its subsidiary CTB International Corp. had signed an agreement to buy the controlling interest of Israeli company AgroLogic. The company designs and manufactures integrated systems for cultural use including climate controllers, feed and poultry weighing systems. Cellulogic, AgroLogic's subsidiary which makes warning and control systems was also acquired by CTB International.