Berkshire Hathaway Buys Remaining Stake in IMC International

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Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) announced today it would acquire remaining 20 percent of IMC International.

Berkshire Hathaway

Berkshire Hathaway Inc.’s IMC International Metalworking Acquisition

Warren Buffet’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) has paid $2.05 billion to acquire the remaining outside stake in metalworking firm IMC International Metalworking Cos BV.

IMC, known as Iscar, makes cutting gear for industries including aerospace and auto manufacturing. Berkshire first acquired 80 percent of the company in 2006 for $5 billion. At that time, it was considered one of the largest deals ever involving an Israeli company and Buffet’s biggest bet outside of the United States.

The 2006 deal with Berkshire made the Wertheimer family among the richest in Israel. German-born Stef Wertheimer has established a number of industrial parks in Israel aimed at promoting peace by having Jews and Arabs work together.

In a statement, Mr. Buffet ascribed the 64 percent increase in IMC’s valuation over the past seven years to the tool maker’s substantial growth.

According to Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s annual reports, Iscar had 11,933 employees at the end of last year, compared with 6,518 six years earlier. Iscar has been enhancing operations in Asia, including at its Tungaloy unit in Japan. Iscar has also invested in TaeguTec Ltd., a cutting-tools maker based in South Korea.

Iscar has the credit for being among Berkshire’s “powerhouse five” non-insurance operations that includes Marmon, the Burlington Northern Santa Fe railroad, Lubrizol and MidAmerican Energy. The group reported aggregate earnings of $10.1 billion last year, as against $600 million from 2011. Mr. Buffet wrote in a letter to shareholders in March that unless the U.S. economy tanks – which he doesn’t expect – his powerhouse five should again deliver higher earnings in 2013.

Berkshire is expected to report first-quarter results Friday.

Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) climbed 19 percent this year through yesterday in New York trading. The shares closed at a record $161,025 on April 25.

Mr. Buffett last quarter bemoaned Berkshire’s failure to land a major acquisition during 2012 to use its swelling cash hoard estimated at $47 billion, and in his annual letter to shareholders called his company’s performance “subpar” despite a $24 billion increase in its net worth. He subsequently committed about $12 billion in February in a deal with Jorge Paulo Lemann’s 3G Capital to take HJ Heinz Co. private. This transaction was approved by shareholders of the ketchup maker yesterday.

Wachtell, Lipton, Rosen & Katz provided legal advice to the Wertheimer family and IMC, according to a statement. Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) was advised by its usual law firm, Munger, Tolles & Olson LLP.

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