2012: Would Berkshire consider an acquisition larger than $20 billion?

JAY GELB: Warren, this question is on acquisitions. Would you consider an acquisition in excess of $20 billion?

And if so, would it be funded in terms of existing cash, as well as issuing debt and equity, or perhaps even selling existing investments?

WARREN BUFFETT: Yeah. We considered one here just a month or two ago which we would have liked — I wish we could have made it. There was probably about 22 billion.

I mean, it gets — above 20 billion it gets to be more and more of a stretch, particularly because we won’t use our stock at all.

We used stock in the Burlington Northern acquisition, and we felt that it was a mistake, but we were using it for what, in effect, turned out to be about 30 percent of the deal, and we felt that we were doing well enough with the cash that overall that the mix was OK.

But we would not use our stock now, and we wouldn’t even use it for 30 or 40 percent of some deal. It’s hard to imagine. So we really —

CHARLIE MUNGER: It’s hard to imagine, but it could be conceivably happen.

WARREN BUFFETT: It could happen, it could happen.

But I don’t think it will happen. (Laughs)

CHARLIE MUNGER: I don’t either.

WARREN BUFFETT: So, we looked at this 22 or $23 billion-dollar deal, and we would have done it if we could have made the deal.

But it would have stretched us, but we would not have pushed it to the point where it would have taken our cash below 20 billion.

We would have sold securities, we would have done whatever was necessary to have a $20 billion cash balance when we got done with the deal.

But I would have had to sell some securities I didn’t want to sell. I liked the deal well enough so I would have done it.

Now, if that had been 40 billion, I don’t think we, you know, no matter how well I liked it, I don’t think I would have wanted to peel off 25 billion or so of marketable securities trying to get it done, and I certainly wouldn’t want to be in limbo not knowing exactly where the money was going to come from, and therefore, be subject to some terrible shock in the world, in the market.

If you have a $20 billion-dollar deal, though, I’ve got an 800 number, so — (Laughter)

But you’ve actually sort of hit the point where we start squirming a little bit as to where we would come up with the money.

On the other hand, the money is building up month by month so I — we will — if we can make the right $20 billion deal, we’ll do it. And next year, if we haven’t made a deal, I’ll probably say if we can find the right $30 billion deal, we would do it.