Berkshire Hathaway Inc. (BRKA) disclosed Wednesday morning that it will spend $2.05 billion to acquire the remaining 20 percent of Israel-based IMC International Metalworking Companies BV that it doesn’t already own. Berkshire, headed-up by billionaire investor Warren Buffett, said that it will be acquiring the remaining stake from the Wertheimer family that founded the company sixty years ago.
Berkshire acquired its 80 percent stake in the company known as “Iscar” in 2006 for $5 billion. It was the first overseas acquisition in the history of Berkshire Hathaway. According to Nasdaq.com, it was one of the largest corporate deals in Israel’s history.
“Since the time IMC entered our lives, my partner, Charlie Munger, and I have enjoyed Berkshire’s association with the company, the Wertheimer family, and the company’s management team,” said Warren Buffett, chairman and chief executive at Berkshire. “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, and we are delighted to acquire the portion of the company that was retained by the Wertheimer family when IMC first became a member of the Berkshire group of companies.
Based on purchase price, Buffett is saying that the value of Iscar has risen by about 60 percent since Berkshire’s initial investment.
Iscar manufactures and sells a broad range of tools for the metalworking industry through a global network of manufacturing facilities, with the largest being in Tefen, Israel. Other plants are located in the United States, Germany, China, Brazil, Korea, India, Italy and Japan.
After a 2012 where Berkshire didn’t land a single major acquisition, much to Buffett’s dismay, the conglomerate hasn’t been afraid to spend cash in 2013. In February, Berkshire teamed with 3G Capital and bought ketchup maker H.J. Heinz Compnay (HNZ) in a deal valuing Heinz at $28 billion, including assumed debt. The Heinz acquisition is regarded as the biggest ever in the food industry.
Buffett has voiced his desire to make some major acquisitions in 2013, calling last year’s efforts “subpar” in his latest annual letter to shareholders in March. The S&P 500 provided 16 percent returns in 2012, outpacing Berkshire’s 14.4 percent rise in share value. Berkshire has a diverse group of businesses under its umbrella, including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services.
Shares of BRK.A are trading Wednesday at $160,320 each, up $1,320 on the day. Class B shares are trading at $106.74, up about one-half of a percent on the day, shortly after the noon hour. Both Class A and Class B shares are up about 19 percent so far in 2013.
Berkshire Hathaway is expected to report first-quarter earnings on Friday.
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