Berkshire Hathaway Buys Metalworking Firm Stake
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Saturday, May 6, 2006
OMAHA, May 5 -- Rather than wait for Saturday's annual meeting, Warren E. Buffett's Berkshire Hathaway Inc. announced a multibillion-dollar acquisition Friday.
Berkshire said it will pay $5 billion for an 80 percent stake in privately held Iscar Metalworking Cos., which makes metal-cutting tools. The company's current owners, the Wertheimer family, will retain 20 percent ownership.
The deal appears to be the third largest in Berkshire's history, behind the $5.1 billion acquisition of utility PacifiCorp announced last year and the $16 billion stock purchase of reinsurance giant General Re in 1998.
Investors had been speculating that Buffett might announce an acquisition at Saturday's meeting because Berkshire has been flush with more than $40 billion in cash, and Buffett has said he was looking for the right opportunity.
Iscar's management team will remain in place, as is customary when Berkshire buys companies. Iscar has facilities worldwide, with the largest in Tefen, Israel.
"As a truly international business, IMC is a top performer in its industry," Buffett said in a statement. Buffett, chairman of Berkshire Hathaway, is a major investor in The Washington Post Co. and sits on its board of directors.
Berkshire spokeswoman Debbie Bosanek said no one was available to discuss the acquisition because the company is preparing for the annual meeting, expected to draw a record 23,000 people.
The company reported a 70 percent jump in first-quarter earnings on strong performance from its investments and insurance businesses. Profit was $2.31 billion, compared with $1.36 billion in the comparable period last year, according to Berkshire's filing with the Securities and Exchange Commission, released late Friday afternoon.
Berkshire owns a diverse mix of companies including furniture, insurance, jewelry and candy companies, restaurants, natural gas and corporate jet firms, and has major investments in such companies as Coca-Cola Co., Anheuser-Busch Cos. and Wells Fargo & Co.
Shares of Berkshire stock gained $710, or about 1 percent, Friday to close at $88,710 on the New York Stock Exchange. The company announced its latest acquisition after the market closed.
