Finance History | ISCAR Headquarters, Tefen, 5 July 2006 — US$4 Billion Bought 80 Percent of a Global Toolmaker

On 5 July 2006, Berkshire Hathaway acquired 80 percent of IMC International Metalworking Companies, the parent of ISCAR, for US$4 billion in cash in 2006 dollars. The Wertheimer family retained the other 20 percent, leaving the sellers with a continuing economic interest while Berkshire obtained control. ISCAR designed and manufactured small cutting tools used with large machine tools in metalworking operations, including turning, milling, drilling, boring and threading. The tools were consumable, but their price was only part of their economic value because tool geometry, material and reliability could affect machining speed, equipment uptime, scrap rates and the productivity of far more expensive customer assets. That relationship supported repeat demand when a tool performed well, while continual engineering and customer support were necessary because manufacturers could compare alternatives and production methods kept changing. At acquisition, the group operated through facilities and commercial organizations in 61 countries, giving Berkshire a global industrial platform based outside the United States. Berkshire's 2006 shareholder letter identified ISCAR as its first business acquisition headquartered outside America, making the transaction a geographic expansion as well as an industrial one. The retained family stake aligned part of the sellers' future wealth with results after the closing and allowed experienced leadership to remain connected to the company instead of treating the deal as a complete exit. In 2013, Berkshire purchased the remaining 20 percent for US$2.05 billion in 2013 dollars, demonstrating how a controlled investment could become full ownership through a later, separately priced transaction. The two-step path also showed the consequence of strong operating performance: the minority interest acquired later commanded substantial value even though Berkshire already controlled the enterprise. ISCAR Headquarters in Tefen anchors the first closing to the research and automated manufacturing campus behind the business, where a US$4 billion payment in 2006 dollars bought control of a specialized toolmaker whose products earned their place by improving customers' production economics. Photo: U.S. Embassy Tel Aviv, CC BY-SA 2.0, via Wikimedia Commons.