Warren Buffett has said he is "salivating" at the thought of spending some of his $40bn cash on a big acquisition as he revealed that two $20bn deals fell through this year after disagreement over price. The billionaire investor told CNBC that he was unwilling to compete with other bidders in his pursuit of companies to add to Berkshire Hathaway, the candy-to-cargo train conglomerate he controls. Mr Buffett very rarely sells a company that has been absorbed by Berkshire, which has a $217bn market capitalisation, and prefers to negotiate directly rather than participate in an auction that might drive up a company's price. The veteran investor is famed for his ability to put to work cash held by Berkshire's extensive insurance operations and the income from its more than 70 operating businesses. Four of the five largest of those operating businesses - which produced $9bn of Berkshire's $15bn in 2011 pre-tax earnings - were purchased in the past seven years. The last big deal signed by the "Sage of Omaha" was the takeover of chemicals group Lubrizol for $9.7bn agreed in early 2011, a transaction that also saw senior lieutenant David Sokol depart under a cloud due to transactions in Lubrizol stock. There are 75 companies in the S&P 500 with market values of $15bn to $20bn, including groups such as food manufacturer Heinz, Johnson Controls and energy supplier Con Edison. The prospect of changes to US tax laws in the new year, which may see the rate of long-term capital gains rise from 15 per cent, could also prompt owners of large privately held businesses to consider a sale. Mr Buffett has frequently said he will consider simple businesses with management in place that demonstrate "consistent earning power" and good returns while using "little or no debt." Since that meeting, when Mr Buffett was peppered with questions about Berkshire's lowly valuation, the company's stock is up 16 per cent, to $131,200 per share. The investor also said that he had added to his stock holdings of mortgage lender Wells Fargo, but had sold some shares in Procter & Gamble due to its valuation. Mr Buffett also said that he remains bullish on the US economy, which he expects to continue "inching ahead" even as global growth slows, as the housing market recovers. Berkshire's businesses have begun to see a pick-up in demand and he said that he expects them to hire about 8,000 people in response this year.