OMAHA, Neb (AFX) - Warren Buffett's Berkshire Hathaway Inc said on Friday that it agreed to acquire 80% of Iscar Metalworking Cos. of Israel for $4 billion. The purchase illustrates Buffett's penchant for buying family-owned firms as he looks to put more of the company's $40 billion in cash to work. It's also the latest example of Buffett's diversification into more overseas assets -- a strategy designed to shield Omaha, Neb.-based Berkshire Hathaway shareholders from weakness in the U.S. dollar. The IMC deal was announced as Berkshire Hathaway shareholders gathered for this weekend's annual meeting in Omaha, Neb., where the quest for more, large acquisitions will likely be high on the agenda. Friday's deal for the privately held firm will leave 20% of the company in the hands of the Wertheimer family, IMC's current shareholders and founders, and values the business at $5 billion, Berkshire Hathaway said in a written statement. A rising stock market, continued availability of relatively cheap credit and competition from rival acquirers like private-equity funds has made it harder for Berkshire to find big acquisitions that fit Buffett's strict value-investing criteria. That's part of the reason why Berkshire shares have stagnated over the past two years. In the annual letter he wrote to shareholders in 2004, the famed investor acknowledged that he'd 'struck out' by not making any multibillion-dollar acquisitions that year. Deal-making picks up More recently, however, Buffett has been more successful in tracking down opportunities. Earlier this year, his company struck deals to buy sports clothing maker Russell as well as BusinessWire, which distributes press releases for corporate clients. With the IMC deal, Berkshire has apparently made its largest acquisition since last year's purchase of giant utility PacifiCorp. 'That will eat up a chunk of cash,' said Jeff Auxier, manager of the Auxier Focus Fund and a Berkshire shareholder. 'That's three pretty large acquisitions in the past few months.' Separately, Berkshire announced a 70% jump in net income to $2.31 billion, or $1,501 share, up from $1.36 billion or $886 a share in the same period last year. Revenue came in at $22.76 billion, up 29% from $17.63 billion last year. In vying to buy family-run businesses like IMC, Buffett has an advantage over private-equity funds because he has a reputation for not meddling with the firms he owns, Auxier added. 'For families that own and love their businesses and don't want to sell to private-equity firms, it makes sense to sell to Buffett,' Auxier said. 'There aren't a lot of buyers out there that won't want to rearrange or dismantle parts of the businesses they buy.' Indeed, IMC executives will remain in place and the headquarters will stay in Tefen, Israel. Buffett said in a written statement that IMC's metal-cutting business in markets like Europe, Asia and Latin America made it an attractive target. 'With this acquisition, we have the benefit of investing in a stable business with very significant growth prospects,' he said. Betting against the dollar Buffett has become increasingly concerned in recent years about the U.S.'s growing trade imbalances and their potential to weaken the dollar. In 2002, he increased Berkshire's bets on the dollar weakening and more recently he invested more money in overseas assets to hedge against a decline in the greenback. He should get some help from IMC, which operates plants in Israel, the U.S., South Korea, Brazil, China, Germany, India, Italy and Japan and has customers in 61 countries. 'Owning businesses with operations outside the U.S. is pretty consistent with his recent strategy,' Auxier said. 'This gives Berkshire greater diversification and he can leave the operations to the family owners.' This story was supplied by MarketWatch. For further information see www.marketwatch.com. newsdesk@afxnews.com ak COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited