The recent lawsuit between Cleveland Browns owner, Jimmy Haslam, and Warren Buffett’s Berkshire Hathaway has come to an end with a settlement. This legal battle centered around accounting practices at Pilot Travel Centers LLC, a company owned by Haslam’s Pilot Corp. However, the specifics of the settlement have not been made public.
The resolution of this dispute now leaves the Haslam family with an important decision to make. According to a 2017 business deal, they have the option to sell their remaining 20% stake in Pilot Travel Centers to Berkshire. This move would solidify the already established relationship between the two entities.
Pilot Travel Centers, based in Knoxville, Tennessee, is a renowned fuel company that operates over 650 travel centers across the United States and Canada. These centers are predominantly known as Pilot or Flying J and are located in 43 U.S. states and six Canadian provinces.
While there has been no official statement on the matter, speculation remains as to whether the Haslam family, which includes former Tennessee Gov. Bill Haslam, will indeed sell their stake to Berkshire. Both Pilot Corp. and Berkshire have chosen not to comment on this matter at this time.
Berkshire’s Acquisition of PTC: A Legal Battle Unfolds
In 2017, Berkshire made a strategic move by purchasing a 38.6% stake in PTC for a substantial amount of $2.76 billion. As part of the deal, the agreement stated that Berkshire would take complete control of PTC by acquiring an additional 41.4% interest in January 2023. This control purchase came with a hefty price tag of approximately $8.2 billion.
Alongside this agreement, Pilot Corp., another major player in the industry, had an annual 60-day window starting from January 1st of this year to sell its remaining 20% interest in PTC to Berkshire. The sale price would be determined based on PTC’s earnings from the previous year.
However, as the first sale deadline approached, tensions escalated between the two sides. Accusations of manipulating financial records in order to influence the purchase price arose. Both Berkshire and Pilot Corp. claimed that each other was trying to unfairly sway the final price Berkshire would pay for the Haslam family’s remaining 20% stake in the truck-stop chain.
Pilot’s attorneys, in a complaint to the Chancery Court, highlighted that Berkshire’s SEC filing from the previous year listed Pilot Corp.’s “redeemable noncontrolling interest” in PTC at around $3.2 billion. However, Pilot alleged that after gaining control of PTC, Berkshire implemented a controversial accounting practice known as “pushdown accounting.” This resulted in reporting lower net income for the company. Pilot argued that a 2017 agreement explicitly prevents Berkshire from making such accounting changes without Pilot’s consent.
In response to these allegations, Berkshire fired back with claims that Haslam had attempted to bribe employees at the Pilot truck stop chain to artificially inflate the company’s value. Their intention was allegedly to increase the amount Berkshire would have to pay to acquire the remaining stake.
The conflict between the two behemoths has not gone unnoticed, as federal prosecutors have initiated an investigation into Berkshire’s bribery allegations. The legal battle continues to unfold, with both parties vying for control and putting forth their arguments in the Delaware court.
