Buffett's TTI buys Israel-based Ray-Q
Berkshire Hathaway subsidiary to purchase company developing, distributing electrical interconnect solutions to military industries. Ray-Q, which employs 70 workers in Israel, expected to stay in country
Ray-Q (formerly Tex Tronics), which is owned by CEO Yigal Funt (49.8%), CTO Avner Gilath (26.6%) and CSO Ezra Carmel, will be sold to TTI, a Berkshire Hathaway subsidiary which specializes in distributing passive, interconnect, electromechanical and discrete semiconductor components to companies worldwide.
The final details of the deal have yet to be disclosed; therefore it is still unclear how much TTI paid for the acquisition. Yet the sum is likely smaller than what Buffett paid for Iscar, which was purchased by Berkshire for some $6 billion in two rounds: In 2006 and in 2013. The deal is still subject to the approval of the Anti-Trust Authority and other regulatory authorities in Israel.
Distributing, planning electric components
TTI was purchased by Berkshire Hathaway in 2006, and is since operating as a wholly owned subsidiary of the company. TTI is a specialty distributor of electromechanical and discrete semiconductor components, it employs more than 3,800 workers worldwide and is active in more than 100 countries.Ray-Q is not the first Israeli company purchased by TTI. It was preceded by Net-aye, which also develops electrical systems, and was bought by the company 3.5 years ago. But compared to Net-aye, which was acquired by TTI in a deal estimated at several millions of dollars, the current transactions appears to be of a much more significant financial scope.
The acquisition will not just bring TTI into the military industry for the first time, but will also expand its fields of expertise and allow the company to not only distribute electric components, but to also be responsible for the engineering planning of their wiring.
Considered a leading player in the development of electric systems in Israel, Ray-Q purchases electrical components for its clients and plans their interconnection. The company took part in the planning of electrical systems in almost all military systems developed in Israel in recent years, and it cooperates with all the country's major security companies.
Ray-Q was founded in 2000. Its executives, led by CEO Funt, were formerly employed at the Israeli office of American electrical equipment corporation Raychem. Funt began working in the company after studying in the United States, and was responsible for establishing its Israeli office. He later expanded the Israeli office's activity to Eastern Europe.
Raychem was purchased by the Tyco corporation in 1999 for some $2.9 billion. Shortly afterwards, Funt and his partners from Tyco bought the operations of Raychem's Israel office and founded Ray-Q.
Over the years, Ray-Q expanded its activity to India, Russia, Ukraine, Germany and other countries, basing its main business model not just on the distribution of electrical components but also on entering projects at the stage of electrical system planning, thereby distinguishing itself from other distributors of electrical and electronic equipment and providing added value to its customers.
Funt told Calcalist on Saturday that he would remain in the company after the acquisition, and that as part of the agreement he will develop TTI's activity in other countries, not just in the military field, based on Ray-Q's business model. Funt further revealed that in the past the company had held talks with other companies which were interested in purchasing it.
Ray-Q currently employs 100 workers, 70 of them in Israel. Funt stressed on Saturday that there was no intention of relocating the company's activity. "Israel is TTI's model for other countries, so there is no plan of moving its activity abroad," he said.
'Opportunity to add superior technical value'
Gene Conahan, TTI president in Europe and Asia, said in an official statement issued by the company over the weekend about the acquisition: "It's not often a company has the opportunity to add such longevity and superior technical value to their service offering.
"I am very pleased to be bringing the wiring and harness assembly expertise of Ray-Q to the TTI teams in Europe and Asia – and to the benefit of our customers worldwide."
Paul Andrews, TTI founder and chief executive officer, commented: "While Ray-Q's long track record of success speaks for itself, I am particularly gratified by the company's mission; to be a supplier of choice – always dealing ethically with our customers, our supplier partners and fellow employees.
"These are the values that have been core to TTI's success for over 40 years and ensure that this is an excellent cultural fit for both of our companies. My team and I welcome Ray-Q's associates and customers to the TTI and Berkshire Hathaway family."
Buffett's ties with Israel began in 2006, when he shocked the Israeli economy by purchasing control of Iscar, a maker of metal cutting tools. After completing the takeover earlier this year, Buffett said in an interview to Calcalist that Israel was his company's biggest investment outside the US and that he would be glad to receive additional offers to invest in the country, which he defined as "an amazing country with a lot of energy and excellent minds."
