Berkshire Hathaway To Acquire Iscar

In May, Berkshire Hathaway announced its plans to acquire 80 percent of Iscar Metalworking Companies (IMC). “We are delighted to partner with the Wertheimer family and IMC’s current management led by Eitan Wertheimer and Jacob Harpaz,” says Warren Buffett, Berkshire Hathaway Chairman and Chief Executive Officer.

Production Machining was given access to Iscar president and CEO, Jacob Harpaz, who was kind enough to answer questions about the recently announced deal between Iscar and Berkshire Hathaway.

PM: Can you give us some background on how this deal developed?

Mr. Harpaz: We searched for a strategic partner who will be able to lead our business to new horizons and at the same time will respect our business model and self targets. There could have been no better match than that between Iscar and Berkshire Hathaway under the unique and promising leadership of Mr. Buffett.

PM: When you first heard about Berkshire Hathaway’s interest in IMC, what concerns did you have? How were they satisfied?

Mr. Harpaz: We never had any concerns, only hopes.

PM: Does the high profile and success of Berkshire Hathaway send a positive message about the viability of metalworking in general? Do you see this as an optimistic sign for the metalworking market ongoing through 2007, 2008 and beyond?

Mr. Harpaz: We believe Mr. Buffett’s investment will have a positive impact on the Iscar group of companies. For the short term, the new ownership brings excitement and pride. For the long term, we believe it will have a major impact on the world of cutting tools, which will now be viewed as a promising sector of industry that is an auspice by the world’s best investor ever.

PM: How will this sale strengthen the company’s position globally?

Mr. Harpaz: We anticipate that being a part of a leading U.S. company, Berkshire Hathaway will contribute to Iscar’s future growth in North America and other regions of the world.

PM: Do you see the IMC group continuing intact or might some of the companies be spun off over time?

Mr. Harpaz: Absolutely not. There will be no such changes, and we anticipate that the IMC group will continue to flourish.

PM: Do you see IMC continuing to grow through acquisition? If so, will such growth remain within metalworking?

Mr. Harpaz: Acquisitions are possible when there are attractive targets.

PM: In light of the Maxcor acquisition of Thyssen, do you see some context to Israeli-based investors looking at diversification within metalworking?

Mr. Harpaz: The world is becoming a global village. As such, we believe that the relevancy relates more to the market itself rather than to the nationality of its players.

PM: Looking at the global situation, would you comment on how IMC sees the emergence of leftist regimes in Latin America and unrest in other parts of the world as it pertains to your ongoing strategy in these markets?

Mr. Harpaz: We are industrialists, not politicians. As a global company, we promise to be anywhere on the globe within legal confines where there is industry, and where our innovative products can contribute to the growth and success of other businesses. This is our goal.

PM: Do you see any regulatory problems that might forestall finalization of this sale?

Mr. Harpaz: No.

PM: In your interactions with Berkshire Hathaway, are there any anecdotes you can share that might shed light on Mr. Buffett’s attitude about the metalworking industry?

Mr. Harpaz: We’d rather keep these a while longer with us without sharing them. All I can say is that Mr. Buffett is one of the most exciting people I have ever met.

PM: Thank you.