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Berkshire's $2B IMC Deal Highlights Buffett's International Hunt

Stocks in this article: BRK.A BRK.B HNZ

NEW YORK ( TheStreet) - Berkshire Hathaway (BRK.B) is buying a remaining 20% stake in IMC International Metalworking Companies for $2.05 billion, as the Warren Buffett-run company takes full control of the metal products conglomerate.

The deal is Berkshire's second big acquisition in 2013, and follows its $23 billion acquisition of iconic ketchup maker Heinz (HNZ) in February.

Buffett is buying IMC, otherwise known as Iscar, from the company's founding family, in a move that is similar to deals such as Heinz and Marmon Group.

Berkshire took an 80% stake Israel-based IMC in 2006 at a valuation of $5 billion, and has seen a surge in the company's earnings in recent years.

"Since the time IMC entered our lives, my partner, Charlie Munger, and I have enjoyed Berkshire's association with the company, the Wertheimer family, and the company's management team," Warren Buffett said in a statement.

"As you can surmise from the price we're paying for the remaining interest, IMC has enjoyed very significant growth over the last seven years."

"The growth experienced by IMC since the 2006 Berkshire transaction validates the faith that Warren and Charlie showed in our business and the special people in Tefen, Israel," Eitan Wertheimer said in a statement.

Wertheimer is a member of the company's founding family.

Berkshire's stake acquisition comes just ahead of the company's May 4 annual shareholder meeting in Omaha, Nebraska.

In a Wednesday morning phone interview, Whitney Tilson of Berkshire shareholder Kase Capital said IMC is a representation of how Buffett cuts international deals.

Traditionally, Buffett has held special meetings for Berkshire's international investors at the company's shareholder meeting, in search of investment opportunities.

"I think he will be willing to talk about big deals around the world," Tilson said of his expectations heading into the shareholder meeting. "He is trying to replicate Iscar."

"I'd be curious and I would hope we have a chance to hear more about Warren's appetite globally," Thomas Russo, a partner at Gardner Russo & Gardner, said in an April interview, discussing his expectations for Berkshire's shareholder meeting. "I am just curious why he has softened his hunt for global elephants," Russo added.

Gardner Russo & Gardner is Berkshire's tenth-largest shareholder, with a stake of nearly $800 million in the company's voting shares, according to Bloomberg data.

"Berkshire has a collection of best-in-class companies, which positions it well in nearly any environment," Clifford Gallant, a Nomura analyst, wrote in a Wednesday initiation of coverage on the company's shares.

"From strong brands to low-cost distribution models to dominating market shares or limited competition, all of the major Berkshire businesses have sustainable competitive advantages, in our opinion," Gallant noted in his report, which gives Berkshire Class A shares a $184,000 price target and a 'buy' rating.

Berkshire Hathaway shares were rising less than 1% in early Wednesday trading to $160,100 and are just below record highs hit in April.

-- Written by Antoine Gara in New York.

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