“This is the greatest investor on the face of the earth,” Prime Minister Ehud Olmert told the Cabinet. “He is not Jewish, he is not a Zionist. He is only saying that he supports the Israeli economy and sees in it what we, even in our dreams, hesitate to say.”
The government came away with a whopping $1 billion in taxes, and it could be just the beginning. “It represents a high vote of confidence which will boost Israel’s status in the world and attract other foreign investors to follow Buffett’s lead,” said Israeli economist Shlomo Maoz.
The purchase of Iscar Metalworking, sight unseen, is the third largest deal Buffett has ever made and his first major acquisition outside the US. He has indicated that he may buy additional Israeli companies.
“We are investing $4 billion in an amazing band of people from Israel,” Buffett told 25,000 people at his annual meeting in his hometown of Omaha, Nebraska. “In another five or 10 years, we’ll look back and understand that what we declared here is one of the most significant things Berkshire Hathaway has ever done. Iscar will be a very large and important company.”
Buffett, CEO of Berkshire Hathaway, has investments in more than 60 companies, including H&R Block, Anheuser-Busch, Coca-Cola and Wal-Mart. With an estimated worth of $40 billion, he is the second richest man in the world behind Microsoft’s Bill Gates.
The deal values Iscar Metalworking, a manufacturer of advanced cutting tools, at $5 billion (Buffet bought 80 percent) and makes its owners, Stef Wertheimer and his son Eitan, the richest family in Israel.
Wertheimer fled Nazi Germany at age 10 and came to Palestine. He dropped out of school at age 14, and later served in the Palmach, the commando force of the Haganah. He couldn’t even afford a lathe when he started Iscar in a backyard shed in 1952.
Iscar is located in an unlikely place—the Galilee, far away from powerful commercial hubs like Tel Aviv and Jerusalem. But Wertheimer's vision is to develop neglected areas of the country, including both the Galilee in the North and the Negev in the South. He has built four industrial parks in these regions, with more than 150 export-oriented businesses.
Wertheimer sees business as a way of building bridges. “We've shown how an integrated workforce—Jews, Arabs and Druze working together—can make a difference,” he said.
Wertheimer tried to set up twin Palestinian and Israeli business parks in late 2000, with a café in the middle. But the Palestinian intifada (uprising) erupted shortly before the planned groundbreaking, and the plans were shelved.
“I would like to…commend the Wertheimer family.” Olmert said. “There are none like you—patriotic, lovers and builders of this country. And I am convinced that the great compensation you are receiving following the sale will be a lever for further development in the same pioneering, Zionist spirit that has always characterized this country."
