Warren Buffett ISCAR Investment. Why and how Warren Buffett invested in ISCAR Metalworking Companies, an Israeli company. Buffett acquired 80% of Iscar Metalworking Companies for $4 billion in cash in 2006. Iscar is an international company based in Israel, and makes precision metal-cutting tools. Its primary customers are in the auto and aerospace industries.
The deal represented Buffett’s first major international investment, and was an excellent one for Buffett in many ways.
Why Warren Buffett Invested in ISCAR
First, the size of the deal was the largest in Israel’s history and led the Israeli government to grant Buffett strategic investor status. This meant that Buffett would not have to pay taxes on Iscar’s earnings for 10 years. This provides Buffett with a unique advantage.
Second, Iscar’s international presence meant that it generated earnings in foreign currencies, allowing Buffett to reduce his portfolio’s dependence on the value of the declining dollar.
Third, it put Buffett in touch with a team of managers whom he described as ‘extraordinarily talented’. The company had a strong culture of trust. It also treated customers very well and ensured that orders were always delivered on time.
Fourth, ISCAR was a leader in its field and enjoys strong competitive advantages. Warren Buffett is acting in line with his winning formula of buying great companies at fair prices.