ISCAR

ISCAR Metalworking is an Israeli manufacturer of small, consumable precision cutting tools — inserts, blades, drills, and milling tools used with large machine tools in metalworking. Acquired by Berkshire Hathaway in 2006, ISCAR became Berkshire's first foreign-headquartered business and the defining proof of the "Buyer of Choice" thesis going global.

📝 The Acquisition (2006)

• Structure: Berkshire acquired 80% of ISCAR for approximately $4 billion on July 5, 2006. The Wertheimer family retained the remaining 20%.
• Origin: In October 2005, Eitan Wertheimer sent Buffett a 1¼-page letter with no bankers, no auction, no intermediaries. "Character and talent just jumped off the page at me," Buffett said.
• Due Diligence: Jacob Harpaz (CEO) and Danny Goldman (CFO) flew to Omaha in November 2005. Buffett visited Israel in September 2006 with a delegation of Berkshire directors. His assessment: "We — every one of us — have never been more impressed with any operation."
• The Filter: ISCAR explicitly rejected the auction process. The Wertheimers cared too much about their employees and business culture to accept the highest bid. This self-selection is the core of Berkshire's Buyer of Choice thesis.

📝 The Business

• Products: Consumable cutting tools — the "blades" that are worn away during precision machining and must be regularly replaced. High-repeat-purchase, technically demanding.
• Strategy: "We are not only selling tools, we are selling technology. We are selling the customer a better way to make profit." — Jacob Harpaz
• Scale: By 2006, ISCAR had operations in 61 countries worldwide, making it a genuinely global manufacturing brand.
• Economics: Low fixed-cost base relative to revenues; high customer loyalty due to precision engineering and technical support relationships; pricing power through technological differentiation.
• Competitive Position: Considered among the top two or three cutting-tool manufacturers in the world.

🚀 2010: The Rebound

In 2010, as global manufacturing rebounded from the Great Recession, ISCAR's profits rocketed 159%. This spectacular performance further cemented it as one of Berkshire's "Big Four" non-insurance operations.

📝 Shareholder Meeting Introduction (2006)

At the 2006 annual meeting, Eitan Wertheimer and Jacob Harpaz addressed 24,000 Berkshire shareholders — the first international acquisition leadership team to do so. Wertheimer: "I'm standing here before you representing 5,869 people — not only the people, but the families, their past and their future." Munger: "The average quality of the people in this company is not only extraordinary, it's off the chart."

💰 2013: 100% Acquisition

• The Deal: Berkshire acquired the remaining 20% of ISCAR (IMC) from the Wertheimer family for $2 billion, setting the implied valuation of the enterprise at roughly $10 billion.
• The Bolt-On Logic: Buffett noted this as a premier example of a bolt-on acquisition—buying more of a company they already understand intimately, run by a manager (Jacob Harpaz) they already trust implicitly.

🔗 Connections

• People: Eitan Wertheimer (Founder/Chairman), Jacob Harpaz (CEO)
• Concepts: Buyer of Choice, Manager Autonomy, Non-Auction Strategy, Bolt-on Acquisitions
• Sources: 2006 Letter, 2006 Meeting, 2013 Letter