By Alisa Odenheimer and Calev Ben-David
Nov. 18 (Bloomberg) -- Warren Buffett's Iscar Metalworking Cos., the Israeli toolmaker that agreed to buy Japan's Tungaloy Corp. in September, is seeking more acquisitions and sees the global financial slump as a buying opportunity, Chairman Eitan Wertheimer said.
``I've learned from my guru to be greedy when others are fearful,'' Wertheimer said in an interview in Jerusalem, echoing a statement frequently made by Buffett. Iscar is part of Buffett's Berkshire Hathaway Inc., which made two acquisitions in October and has comitted $8 billion to buying stakes in General Electric Co. and Goldman Sachs Group Inc.
Iscar, based in Tefen, northern Israel, makes cutting gear for industries ranging from aerospace to auto manufacturing, for clients including Toyota Motor Corp. Berkshire paid $4 billion two years ago for an 80 percent stake in Iscar, which competes with market leader Sandvik AB. Iscar is looking for industrial companies that are in the same business, according to Wertheimer.
``We like to stick to basics,'' he said. ``If you sleep on the floor, you can't fall out of bed.''
Iscar agreed Sept. 21 to buy a 71.5 percent stake in Japan's Tungaloy, a manufacturer of tools for cars and airplanes. The deal was for $1 billion, Haaretz reported.
Iscar is ``Gillette on steroids'' in the metal-cutting tools industry, said Shai Dardashti, managing partner of New York-based Dardashti Capital Management. The Berkshire shareholder cites Iscar's ``tremendous innovation'' and its commitment to research and development.
Research Spending
Iscar uses about 10 percent of its resources for R&D, according to its Web site, which also displays new products introduced this year that take advantage of advances in coatings and shape-design to improve cutting efficiency.
Sandviken Sweden-based Sandvik, the largest maker of metal- cutting tools, lost 1.2 kronor, or 2.6 percent, to 45.8 kronor on the Stockholm exchange at 3:34 p.m. local time. Berkshire, whose headquarters are in Omaha, Nebraska, slid $365 to $95,250 at 9:34 a.m. in New York Stock Exchange composite trading.
``There are some businesses that Buffett just takes cash out of, and others he puts in, and Iscar is one he clearly would be willing to put money into,'' said Guy Spier, chief investment officer at Aquamarine Capital Management, which holds shares in Berkshire. ``He can see there are huge opportunities for Iscar, which is in a position to grow dramatically.''
Founded in 1952 by Stef Wertheimer, Eitan's father, Iscar now employs more than 6,000 employees. Being part of Berkshire has helped raise Iscar's international profile, Wertheimer said.
Buffett Trips
``Warren's name is very big. Of course, it's in the background, but it's a plus,'' said Wertheimer. ``We are growing at a very fast pace.'' He declined to give specific figures.
Wertheimer has helped arrange two trips abroad for Buffett, accompanying him in October 2007 to China and Korea, and in May of this year to Germany, Switzerland, Spain and Italy. In China, they visited an Iscar subsidiary. The European trip was to connect Buffett to family-owned businesses that may be candidates for acquisition, he said.
``Warren doesn't look for troubled businesses, he looks for good ones,'' says Wertheimer. ``Then he lets the people who know how to run it continue to do so.''
Wertheimer also sees the global slowdown as an opportunity to reorganize and invest in Iscar, since prices are lower and delivery times shorter. He isn't concerned that sales may drop during this period.
``You have to be ready to sell less for a while,'' he said. ``That's fine too.''
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