Berkshire Hathaway and the Haslam family have reached a settlement in a billion-dollar lawsuit over the accounting of Pilot Travel Centers, avoiding a scheduled two-day trial in Delaware Chancery Court. The settlement, the terms of which were not disclosed, pertains to the valuation of Pilot Travel Centers and its impact on the forced buyout of the Haslam family's remaining stake in the truck-stop giant.
The dispute arose when the Haslam family, owners of Pilot Corp., alleged that Berkshire Hathaway improperly adopted a form of accounting that would significantly lower the price Berkshire would pay to acquire the family's remaining 20% stake in Pilot Travel Centers. The trial, which would have been a rare instance involving Berkshire Hathaway, was expected to feature testimony from Greg Abel, designated as the successor to longtime CEO Warren Buffett.
Berkshire, in turn, had accused Cleveland Browns owner Jimmy Haslam of offering payments to Pilot Travel Centers executives to artificially inflate the company's value. This, Berkshire argued, was an attempt by the Haslam family to secure a larger buyout from Berkshire, which already controls 80% of Pilot Travel Centers.
The legal battle took a more serious turn in December 2023 when federal prosecutors in New York began investigating Berkshire's allegations against Jimmy Haslam. The Haslam family and Pilot Corp. vehemently denied these claims.
In the wake of the settlement, both Berkshire Hathaway and Pilot Corp. issued a joint statement announcing the resolution of the Delaware Chancery case. The agreement includes the dismissal of all claims and counterclaims, putting an end to the trial.
Berkshire Hathaway had acquired an 80% stake in Pilot Travel Centers through separate purchases in 2017 and January 2023, buying out the majority stake owned by the Haslams. The Haslam family retained a "put option," allowing them to compel Berkshire to buy out their remaining 20% stake within a 60-day window each year.
The lawsuit, initiated by the Haslam family in 2023, alleged that Berkshire's use of "pushdown accounting" lowered the stated value of Pilot Travel Centers, consequently diminishing the amount owed to the family. Berkshire, in defense, argued that pushdown accounting was not a violation of its purchase agreement with the Haslams.
The settlement concludes a contentious legal chapter, sparing both parties from a protracted trial and providing resolution to the complex financial dispute surrounding Pilot Travel Centers.