American investor Warren Buffett's Berkshire Hathaway Inc. announced on Wednesday it had paid $2.05 billion cash to buy the 20 percent it did not already own of the Israeli company Iscar.
In 2006, Berkshire Hathaway Inc. acquired 80% of Iscar for $4 billion. Iscar Metalworking Companies (IMC) is an industry leader in the metal cutting tools business, owned by Stef Wertheimer and his family with operations worldwide.
At the time, that purchase was one of the largest acquisitions involving an Israeli company, and Buffett's biggest bet outside the United States.
"As you can surmise from the price we're paying for the remaining interest, IMC has enjoyed very significant growth over the last seven years," Buffett said in a statement on Wednesday.
The acquisition was announced three days before Buffett will welcome more than 35,000 people to Berkshire's annual meeting in its hometown of Omaha, Nebraska.
In 2010 Buffett, one of the world’s wealthiest people, said he would like to invest more in Israel.
"We are always interested in more investments in Israel. We will be happy to acquire a large and independent company in Israel, or some small companies - what I call mergers into the existing framework and I think we will do both," he said at the time.
Buffett added that he believes that Israel has a sustainable advantage in the global competitive market place. “If you are looking for brains - stop in Israel, there is no need to go further. If you go to the Middle East to look for oil, then skip Israel. In my opinion, Israel as a state has proven that it has an exceptional amount of brains and energy and in my eyes it works.”
The State of Israel is expected receive tax of at least 1 billion shekels as a result of Wednesday’s deal, according to estimates by sources in the Tax Authority.
"This will save some of the planned austerity measures that would have hit the middle classes," one source told Globes.
The tax receipt on the deal will help the Ministry of Finance to cope with the huge fiscal deficit and will go some way to alleviating the burden on the public.