Haslams say Warren Buffett’s Berkshire wants to take money out of their pockets in truck stop deal

OMAHA, Neb. – The billionaire Haslam circle of relatives says in a lawsuit that Warren Buffett and Berkshire Hathaway are attempting to artificially depress the associated fee the corporate is obligated to pay for the circle of relatives’s last 20% stake in the Pilot Travel Centers truck stop chain that Jim Haslam based.

Berkshire has paid just about $11 billion since 2017 for the primary 80% of Pilot.

Berkshire modified the accounting practices at Pilot this 12 months after it got keep an eye on of the corporate. The lawsuit that was once unsealed Thursday mentioned that fluctuate is artificially miserable Pilot’s reported income, that are used to set the acquisition value Berkshire agreed to pay in 2017.

“Berkshire is intent on using the accounting change to justify grossly underpaying Pilot (the Haslam family) for its 20% interest,” the lawsuit said.

The Haslam family, which includes Cleveland Browns owner Jimmy Haslam and former Tennessee Gov. Bill Haslam, declined to comment beyond the lawsuit.

The redacted lawsuit didn’t reveal how much the Haslam’s believe they could lose because those figures were withheld from the document. But the family did say Berkshire estimated its stake would be worth $3.2 billion without the accounting change.

Buffett didn’t respond to questions about the dispute that were emailed to his assistant on Friday.

Pilot’s Chief Legal Counsel Kristin Seabrook said in a prepared statement that this dispute isn’t related to the operation of the nation’s largest network of truck stops that has more than 850 locations and roughly 30,000 employees in the United States and Canada.

“This legal dispute is limited to a narrow issue between owners and is in no way related to the management or day-to-day operations of Pilot Company,” Seabrook said.

Berkshire is known for largely letting its businesses run themselves and holding onto nearly every business it buys forever. The Haslams said their respect for Buffett and his conglomerate was a big part of why Berkshire was the only buyer they considered. In a somewhat unusual move, Berkshire installed a new CEO at Pilot after it took over this year and made the accounting change at the heart of this dispute.

The truck stops provided a meaningful boost to Berkshire’s revenue and profits this year.

Berkshire’s decision to shift to something called “pushdown accounting” this 12 months pressured Pilot to take on upper depreciation and amortization prices and that resulted in decrease internet source of revenue, in accordance to the lawsuit.

The Haslams attempted unsuccessfully to argue at Pilot board conferences that the corporate mustn’t make that fluctuate or a minimum of that the brand new accounting way should not be used to resolve the price of their stake, however they have been outvoted by means of the 5 Berkshire individuals of the board.

So the elder Haslam appealed without delay to Buffett, however the lawsuit says that all of the respected investor would say is to reiterate that Berkshire will agree to the phrases of the contract all of them signed in 2017.

As phase of that deal, Berkshire purchased 38.6% of Pilot in 2017 for $2.758 billion prior to greater than doubling that to 80% this 12 months for an extra $8.2 billion. Buffett instructed Berkshire shareholders this spring that he needs he may have purchased all of the corporate directly since the value was once higher in 2017, however the Haslams would not promote all of it then.

“The first stage we bought at what turned out to be a very attractive price,” Buffett said at the meeting. “The second stage turned out to be a very good year for the diesel business, which means that the seller got a very good price.”

The Haslam’s have the ability annually to make a decision whether or not they would like to promote their last stake. The circle of relatives requested the court docket to intrude and drive Pilot to revert to the accounting way it used to use prior to they have got to make that call early subsequent 12 months.