* Israeli unit of Berkshire makes metal cutting tools
* Berkshire buys 20 pct of Iscar it did not already own
* Purchase precedes Berkshire annual meeting on Saturday
May 1 (Reuters) - Warren Buffett's Berkshire Hathaway Inc on Wednesday said it paid $2.05 billion cash to buy the 20 percent it did not already own of toolmaker Iscar from the Israeli company's founding Wertheimer family.
Berkshire in 2006 bought an 80 percent stake in Iscar, a maker of metal cutting tools whose formal name is IMC International Metalworking Cos, for $4 billion.
At the time, that purchase was one of the largest acquisitions involving an Israeli company, and Buffett's biggest bet outside the United States. Wednesday's purchase suggests that Iscar's value has since more than doubled.
"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," Buffett said in a statement.
The acquisition was announced three days before Buffett will welcome more than 35,000 people to Berkshire's annual meeting in its hometown of Omaha, Nebraska.
In his annual letter to shareholders on March 1, Buffett described Iscar as one of Berkshire's five most profitable companies outside its insurance businesses.
While Berkshire does not break out Iscar results separately, it said the Tefen, Israel-based unit's profit fell in 2012 because of slowing economic conditions in some non-U.S. markets.
A year ago, Buffett in his shareholder letter described Iscar's management as "brilliant strategists and operators."
Iscar ended 2012 with more than 11,900 employees.
The Wertheimers' sale of an 80 percent Iscar stake in 2006, announced one day before Berkshire's annual meeting that year, made the family among the richest in Israel.
Stef Wertheimer, who is German-born and founded Iscar in 1952, has established a number of industrial parks in Israel aimed at promoting peace by having Jews and Arabs work together.
The law firm Wachtell, Lipton, Rosen & Katz advised the Wertheimer family on the Iscar transaction. The law firm Munger, Tolles & Olson advised Berkshire.