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Warren Buffett: We're Looking at Two Deals But Won't Stretch for a 'Really Big Elephant'

Buffett Shareholders Meeting 2011: No Elephants Now
Buffett Shareholders Meeting 2011: No Elephants Now

Warren Buffett tells shareholders that Berkshire Hathaway is currently looking at two potential acquisitions that would be roughly as large as its $9 billion deal, composed entirely of cash, for Lubrizol earlier this month.

But underlining his extreme aversion to financing purchases with stock or selling an existing business to raise cash, Buffett says, "We can't do a really big elephant now and we won't stretch."

That's a reference to his February letter to shareholders in which he talked about the need for more "major" acquisitions. "Our elephant gun has been reloaded, and my trigger finger is itchy."

On the same theme, Buffett says he would have liked Johnson & Johnson's acquisition of Synthes "a whole lot more" if it had been all cash.

J&J's $21.6 billion purchase price of the Swiss medical devices maker consisted of two-thirds stock and one-third cash.

Our Berkshire Hathaway Portfolio Tracker shows that Buffett's company reported owning 42.6 million J&J shares at the end of December. At Friday's closing price of $65.72, that stake would be worth $2.8 billion. Current price:

Just over a year ago, Buffett told CNBC he would have voted against Kraft's use of stock to purchase Cadbury. He's also criticized Nestle's saleof its pizza business.

In late 2009, Berkshire did use some stock to help pay for its $26 billion acquisitionof Burlington Northern Santa Fe. In an interview on CNBC, Buffett said, "I don't like to use stock, but on this one, because of the size and because they wanted a tax-free option for shareholders, we're doing it 40 percent stock and 60 percent cash."

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