Warren Buffett's "Bet on America": The Complete CNBC Interview

In a live interview this morning on CNBC's Squawk Box, Warren Buffett called his purchase of a big Marmon stake as a "bet on America over a long time." He also revealed that while he has been approached by financials companies about buying a stake, "we have not seen a deal that causes me to start salivating." A summary appears in the WBW post Warren Buffett tells CNBC He's Been Approached by Financials But Hasn't Seen Anything He Likes So Far.

Here is a video clip and transcript of the complete interview:

: Why Marmon?

Buffett: Well, Marmon is our kind of company, Becky. It's in some very basic businesses, but good businesses. It's got terrific management. It's a chance to do a very big transaction which I like, but there's nothing not to like.

Becky: Well, it's a 125 different businesses. People call that a conglomerate. Add that to Berkshire Hathaway's already huge number of companies out there and people start calling it a conglomerate again. Doesn't that bother you? Because right now the stock market doesn't value conglomerates.

Buffett: That's OK with us. Yeah, you can call us a 'conglomerate-squared' now. (Laughter.)

Becky: 'Conglomerate-squared.' It doesn't bother you what the stock market thinks about it?

Buffett: Well, it's what we are. We think it works pretty well. And the test will not be whether the stock market likes it today or tomorrow. The test will be where the company is in 10 or 20 years.

Becky: You know, Marmon's got operations in China and Europe, but most of all it's a U.S. company. Is it fair to say that this is a bet on American industry?

Buffett: Well, yeah, it's very basic American industry. It's about as basic as it gets. So, it's, ah, it's a bet, it's a very large bet on America over a long period of time.

Becky: You know, you've got 60 percent of the company you're buying right now, but you'll be buying the rest over the next six years. Why did you structure the deal that way?

Buffett: It's the way the Pritzker family wanted the structure. We try to tailor deals to what works best for the seller. In this case, ah, there's a group of sellers, and a number of them certainly want to try to ride on the company over the next six years or so. And that's fine with us. I hope they get paid considerably more for the back end.

Becky: They'll be paid more if the company's earnings increase over the next six years?

Buffett: That's exactly right.

Becky: OK. So jumping into this right now, you've got, again, 125 different businesses that make up the Marmon Group ...

Buffett: Don't give me a quiz on the names, Becky, please.

Becky: I won't quiz you on all 125 names, but it's $7 billion in revenue annually and about 21,500 employees. How does that change the composition of Berkshire?

Buffett: Well, it's adds about 10 percent, almost, to the number of employees we have. Although ... we have about 220,000 before this. But, we have 19 at headquarters. It will not add a person to headquarters. We're not going to go crazy around here. And, in non-insurance revenues, this comes, again, as about 10 percent of the non-insurance revenues of Berkshire. It could move the needle at Berkshire.

Becky: OK, it could move the needle at Berkshire. You've got a history with Jay Pritzker of the Pritzker family, being the ones who put together the Marmon group. You met Jay Pritzker over 50 years ago?

Buffett: I met Jay Pritzker, I wrote about it in the 1988 annual report when I was talking about arbitrage. I met Jay Pritzker in 1955 when I was 24 years old, working in New York City. And my bosses sent me over to Brooklyn on the subway to attend a special meeting of the Rockwood Chocolate Company. And Jay Pritzker, I'd never heard of before (until) just before that event, was there and couldn't have been nicer to me. So I've been a, I became an admirer, I followed him. He's a brilliant guy. And I'm doing this deal with his family.

Becky: Is it fair to say you've whetted your appetite for deals at this point? With more than $40 billion still in cash ...

Buffett: I like deals even if I'm broke, Becky (laughs). But we are. And as we mentioned I think in the lead-in, we've gone all year without any sizable deals, so this was sort of the bottom of the ninth for me.

Becky: You had to slide one in just before the end of the year?

Buffett: Yeah, well, you don't have to. You don't want to get into that frame of mind. But it was nice to get one done at year-end. The deal went fast once we started on it.

Becky: Yeah, two weeks ago was the first you heard about this?

Buffett: Yeah, it was two weeks ago today. I'd just seen you in San Francisco at the Hillary Clinton event. And on Wednesday morning two weeks ago there was a young woman from Goldman Sachs who had flown out during the night, got there at one in the morning, to hand me three books on Marmon which I read on the way back. I liked what I read. I got together that Saturday with the two managers of Marmon. I liked them very much. And so, Tom Pritzker, who is running things for the Pritzker family, and I sort-of set a goal of getting it done by Christmas. So just as Santa was coming down the chimney yesterday, we finished the deal.

Becky: You guys were busy all through the holidays...

Buffett: I finally earned my salary for the year. I'd been kind-of lollygagging around up till Christmas Day.

Becky: Joe, you want to jump in?

Joe Kernen: Do you mind, Beck? Mr. Buffett, it's Joe Kernen. Good to hear from you. A lot of the conjecture in the papers today talks about, you like to buy at rock-bottom prices when there's distress. You look at the sovereign funds, I mean every country in the world sees some value in what's happened to our financial companies here. You haven't moved, it's not like you don't have another $40 billion. Are these not rock-bottom prices in your view?

Buffett: Well, I don't know whether they are or not, but we've seen some deals, as you can imagine, in this period.

Joe: All of them, I would think.

Buffett: Yeah, people know our phone number. And we haven't seen anything we want to move on. That doesn't mean we won't in the next six months. But so far we have not seen a deal that causes me to start salivating. But, but, I could be wrong on the ones I haven't done and the big thing is I hope I'm not wrong on the ones I do do.

Becky: You know, Mr. Buffett, the Journal does point out today that the major banks could be less profitable over the next few years because of all the trouble that we've seen in the credit industry. Does that give you pause?

Buffett: No, I mean, there have been some mistakes made in banking. As (CEO) John Stumpf of Wells Fargo said, he said, 'I don't know why the banks had to find new ways to lose money when the old ones were working so well.' And they managed to do so. And you don't get all those, you don't get all the problems behind you in a short period of time. So I would say that there are a number of banks that may do as well or better than they did in 2007, because they already started getting hit then. But, there were some sources of income that were kind-of illusionary but nevertheless got reported as income over the last few years. They won't have those. They'll have the clean-up of those. So it's certainly possible some of the big banks aren't going to hit their highs on earnings for a few years.

Melissa Lee: Mr. Buffett, if I can just jump in. It's Melissa Lee. I'm just curious. Have you been approached by a major financial institution in terms of whether or not you would be interested in buying a stake?

Buffett: Yeah. Yeah.

Melissa: You have been? You turned them down?

Buffett: They sometimes do it indirectly because they don't like to hear 'no' directly. (Laughter.)

Joe: Hey, I got one more Mr. Buffett. You say don't quiz me on the 125 different ..

Buffett: .. Right ..

Joe: ... Yeah, we won't do that, but, I get the feeling that when you're comfortable with management, that that has almost as much to do with going and crunching the numbers on every single business in something that you're buying. Is that fair to say?

Buffett: Yeah, that's more than fair to say because, you know, we're not going to run those businesses in the future. And somebody has to keep track of the 125, and preferably we hope they add-on with certain bolt-on acquisitions to the ones they've got already. So, we are 100 percent management-dependent. We have nobody in those 19 people at headquarters in Omaha that can go out and run Marmon, or any of our other businesses. So, we have to be in with people where we feel comfortable about their ability and integrity and enthusiasm for running the businesses that they're now operating.

Jon Najarian: Warren Buffett, this is Jon Najarian, sir. Just one quick question. With a couple-hundred-thousand employees that you have now, how concerned are you about the health-care costs and providing for those folks since you're now at the level that a lot of the big auto-makers and so forth are at in terms of that being such a large expense to them? Do you get worried about this? Does this keep you up at night, sir?

Buffett: Well, nothing keeps me up at night. If I'm going to do something that keeps me up at night, I don't do it. (Laughs.) But health-care is a huge cost with us. I mean, it's well over a billion a year when you look at all the companies we have. And we don't have a lot of post-retirement health like the auto companies have. We have a little bit of it in a few companies that we've bought, but it's very minor. But we have lots of current health-care, and you know, it's a galloping cost and it's a major problem for American industry. But we solve our problems in this country, so it isn't something that keeps me up at night. But it's something that has to be worked on.

Becky: Mr. Buffett, after you bought Iscar, the Israeli metal-working company last year, there were a lot of people who speculated, who realized that you were looking not only inside the United States but also outside the United States for acquisitions. Is it fair to say you're still looking outside the United States or are you more focused on the U.S. right now?

Buffett: No, we're looking everyplace except Antarctica. (Laughter.)

Questions? Comments? Email me at buffettwatch@cnbc.com