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Buffet Completes Takeover of Israeli Company Active in Turkey

Israel's Cutting Edge



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Certain issues are so unusual that finding a proper way of introducing or entitling them is almost impossible. Everything related to Iscar is odd, including its location near the Lebanese border (see map below). Migdal Tefen is one of the only two Industrial Councils in Israel, the other is Ramat Hovav in the Negev Desert. Like its neighbor town, Kfar Vradim (Village of Roses), the council is directly related to the activities of Stef Wertheimer, founder of Iscar. The main activity of the company is as strange as its name; it specializes on high-precision cutting tools for hard metals.

It sounds so boring that one is tempted to fall asleep even before ending to read the definition. Yet, Warren Buffett, a well known American businessman and investor, and one of the world's richest men, chose it as his first company purchase outside the USA.

Eitan Wertheimer

Eitan Wertheimer, Chairman of International Metalworking Companies
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Stef Wertheimer

Stef Wertheimer
ISCAR's solutions for the automotive industry

Israel and Rolls Royce

Iscar owns a subsidiary called "Lehavei Iscar" (Iscar Blades). It produces blades for turbines. Its customers include Rolls-Royce, Pratt & Whitney, and General Electric. Worldwide, Iscar is second only to Swedish Sandvik, but it leads the market in profitability and growth rate. Control Iscar and you hold a strategic interest of the air flight industry. This begins to explain Buffett's fascination with the company.

The company is literally Israel's cutting edge. It was founded in 1952, after Stef Wertheimer was thrown out of RAFAEL, Israel's Weapons Development Authority. In 1984, Iscar moved out of Nahariya, by the Mediterranean coast, to its actual location, creating the basis for the actual Industrial Council. Complementing the complex, Kfar Vradim was founded as a town for Iscar workers. Wertheimer himself owns a palace in Caesarea, a short stroll from Netanyahu's Palace.

The Unbearable Boredom of Iscar

Obsessed with cutting delicate details in hard metals, Iscar importance relies in boring little facts. The Tefen-Kfar Vradim complex was developed as part of what Stef Wertheimer comprehensive vision of an Industrial Park. He offered his services to other companies which moved to the area and lowered their overheads. Over the years, this was marketed to the Israeli government as a Jewish settlement initiative in an area where Jews have lost majority (Netanyahu Announces Druze Settlement; in the map below, several Druze and Palestinian villages can be seen around Kfar Vradim). Eventually, the State awarded its hero the Israel Prize. Against all odds, also Turkey fell in love with our Stef.

Since Israel's brutal attack on Gaza's Freedom Flotilla the relations between Turkey and Israel deteriorated sharply until President Obama's recent visit to Israel. Netanyahu apologized; however, Turkey announced that it will continue the Nuremberg Trials against IDF generals involved in the massacre. Turkey claimed it cannot stop civilian lawsuits against the criminals; especially after Israel recognized the illegitimacy of its actions. Turkey wants more.

American interests were not the only reason for the apology. Both Israel and Turkey wanted to complete frozen military deals, mainly the supply of radar equipment to the Turkish air force. However, the involvement between Israel and Turkey goes deeper than that. On April 26, Turkey's Industry Minister awarded Adam Elktronik, a company based in the GOSB Teknopark, a prize for an innovative project during a technological parks convention in Istanbul. It is almost superfluous to comment that Adam Elktronik is an Israeli company; another tiny detail is that the GOSB Teknopark was created by Stef Wertheimer, following the Tefen-Kfar Vradim model. He had invested $10 million there. The Israeli hydra has surprising tentacles.

Tefen Industrial Council

Tefen Industrial Council marked "A"

Did you know? The Da Vinci Nazi


Buffett's Dream Deal

In May 2006, Berkshire Hathaway purchased an 80% stake in Iscar for US$4 billion; it was the first time it acquired a company based outside of the United States, and it is one of its few companies outside the insurance market. Berkshire Hathaway is chaired by Warren Buffett, who in 2008 defined Iscar as a "dream deal." Moreover, in a 2012 letter to shareholders, Buffet described Iscar's managers as "brilliant strategists and operators," he also praised the sales growth and performance of the company as "unique in its industry."

On May 1, 2013, Buffett announced that he is buying the remnant 20% of Iscar for $2 billion; this shows the value of the company has increased substantially since 2006. Eitan Wertheimer, Stef's son and Chairman of International Metalworking Companies, the company running the Iscar corporation, said to Israeli newspaper Calcalist: "It was important for us to sell the company before familiar problems regarding the ownership would appear." The deal had transformed Stef Wertheimer into one of the planet's richest men. Buffett's comments kept praising the "Israeli unique company which had become a truly global corporation," "Iscar keeps amazing us," he was quoted by Israeli newspaper Yedioth Ahronoth.

Businessmen like to mercilessly crush ethical and political considerations blocking their way to profits. Yet, in their merciless, cruel, inconsiderate behavior they are often naive. I am not sure that Mr. Buffett understands Iscar capability to show profits when other leading companies in the field cannot. Iscar open list of customers, Rolls-Royce, Pratt & Whitney, and General Electric, are part of the explanation. The industrial links between Israel and Turkey are based on military industries, is another part of the explanation. Iscar strategy, already praised by Buffett, is based on "a fallback position, including inventories," as explained by our Stef to Bloomberg, on November 19, 2012. Those aware of the jargon and techniques, have already recognized the nature of Iscar, a company capable of producing militar-standard items.

Mr. Buffett, you are witnessing the strategy of an army. You are working with a slightly disguised military operation; it's inexplicable profits, at least under your own civilian analysis, are the result of its military-related operations. I am sorry to spoil the delusion behind your dream deal, but there is yet another odd issue behind Iscar. Israel didn't care about selling it because all key facilities and technologies will stay within Israel; the point here is Israel, not Wertheimer.

Most Israelis seeing the name "Iscar" for the first time will mispronounce* it; it doesn't make any sense on its surface level. "Iscar" is a made up name, but it is written exactly as an existing word. The first attempt to pronounce it (Hebrew is written without vowels, names are always tricky to pronounce) will result in "Yeshaker." This is a proper Hebrew verb meaning "he will lie." A word related in meaning and enjoying an equally improbable use is CAZAB (lie), the name for the illegitimate intelligence alliance listening to worldwide communications, of which Israel is an unofficial member. "Iscar" is literally a lie, a front for something else. Iscar's name is undersigned by Mossad. Mr. Buffett, please don't sit with your back to your new friends, they are not what they seem to be.


* Iscar is written with a "shin" but pronounced with the far less common "sin" (it is one letter with two sounds). In order to know how to pronounce, a Hebrew reader refers to the root of the word. In this case it clearly is "shin-kof-resh," from which verbs and nouns related to lies are derived. Thus, if not knowing the company, it would be pronounced Yeshaker.

This is similar to the Biblical "shibboleth" in Judges 12:6, "Then said they unto him, Say now Shibboleth: and he said Sibboleth: for he could not frame to pronounce it right. Then they took him, and slew him at the passages of Jordan: and there fell at that time of the Ephraimites forty and two thousand."

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