Buffett buys Iscar

Teachers want tax revenue from Iscar deal to go to education

By Yuli Khromchenko and Guy Rolnik, Haaretz Correspondents, and Haaretz Service

The head of the Teachers' Union on Sunday called for the tax revenues from a $4 billion deal involving a Galilee based company to be channeled into the education system.

U.S. tycoon Warren Buffett's landmark deal to buy 80 percent of Galilee-based Iscar Metalworking also propelled the Tel Aviv Stock Exchange to record levels Sunday, the first trading day after the transaction was announced the day before.

Speaking at the transfer of ministerial powers at the Education Ministry on Sunday, the teaching union's secretary-general, Yossi Wasserman, said that while the Buffett-Iscar deal had added an unexpected bonus to the state coffers, the education system was in dire need of those funds.
The Tel Aviv 100 Index, rising 1.78 percentage points in early trading, broke through the 900 point barrier for the first time. The Tel Aviv 25 Index rose 1.69 percentage points, while the Tel-Tech Index was up 1.36.

Prime Minister Ehud Olmert, hailing the deal, told the first meeting of his new cabinet Sunday: "This is not just another deal of billions. Here, we are speaking of the greatest investor on the face of the Earth. He's not a Jew. He's not a Zionist. He is just saying that Israel's economy is such that he supports it, and sees in it what we, in our dreams, hesitate to say."

Buffett, referring to his first significant deal outside the United States, hinted in an interview with Haaretz' TheMarker that he may buy additional Israeli companies.

The move is the third largest deal Buffet has ever made.

"We are investing $4 billion in an amazing band of people from Israel," Buffett told TheMarker on Saturday. "If your readers know a company that resembles Iscar, even a little, have them call me immediately. I want to buy. Let them call me collect."

The deal values Iscar, a leading private manufacturer of advanced cutting tools, at $5 billion and will make its owners, Stef and Eitan Wertheimer, the richest family in Israel. Iscar has its factories concentrated in the Tefen industrial zone and has additional plants around the world.

Buffett, chair and CEO of Berkshire Hathaway told TheMarker that "in another five or ten 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."

Asked what he intended to do with management after acquiring the company, Buffett responded, "We'll let them be. This is why we bought the company. At Berkshire we are 16 people in total, even though the companies in our investment portfolio employ 200,000 people. Our job is only to choose the best players, and usually, like in Iscar's case, the players are there when we buy the companies. I wouldn't dream of changing Iscar's management make-up."

Buffett noted he expects the entire Iscar management to remain in place, including President Jacob Harpaz. Iscar President Eitan Wertheimer said that "as members of the Berkshire family, we'll be able to enjoy a stable platform committed to ongoing success."

Prime Minister Ehud Olmert called Eitan Wertheimer last night to congratulate him on the sale. "It's terrific tidings and a great gift to the State of Israel", Olmert said. "We tip our hat to you, personally and in the name of the whole country." The Prime Minister's Office commented that Wertheimer "thanked the prime minister."

Eitan Wertheimer said selling the company for him is "lighting an economic torch," just as his father Stef lit a torch on Independence Day. According to him, Buffett's expression of faith is an important declaration for the country, "and just as they talked about the Balfour Declaration - now they'll talk about the Buffett Declaration." Olmert will speak with Buffett today. A government source said Olmert was indirectly involved in the deal.

Buffett told the annual meeting yesterday that he plans to visit Israel this year.