February 25, 2024

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Warren Buffett’s Berkshire wants to take money out of its pocket in a truck stop deal, Haslams says

Warren Buffett’s Berkshire wants to take money out of its pocket in a truck stop deal, Haslams says

Omaha, Nebraska. (AP) – Billionaire Haslam’s family says in a lawsuit that Warren Buffett and Berkshire Hathaway are trying to artificially lower the price the company is obligated to pay for the family’s remaining 20% ​​stake in Jim’s Pilot Travel Centers truck stop chain. Hossam founded…

Berkshire has paid nearly $11 billion since 2017 for the first 80% of Pilot.

Berkshire changed accounting practices at Pilot this year after taking control of the company. The change leads to an artificial decline in Pilot’s reported earnings, which are used to determine the purchase price Berkshire agreed to pay in 2017, the suit unsealed Thursday said.

“Berkshire intended to use the accounting change to justify 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 governor. Bill Haslam declined to comment outside the scope of the lawsuit.

The redacted lawsuit did not reveal how much Hassan’s family thought they might lose because those numbers were redacted from the document. But the family said Berkshire estimates its stake would be worth $3.2 billion without the accounting change.

Buffett did not respond to questions about the dispute that were emailed to his assistant on Friday.

This dispute is not related to the operation of the nation’s largest network of truck stops, which includes more than 850 locations and nearly 30,000 employees in the United States and Canada, Christine Seabrook, the Pilots’ chief legal counsel, said in a prepared statement.

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

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Berkshire is known for letting its businesses largely run itself and holding on to almost every business it buys forever. The Haslam family said their respect for Buffett and his group was a big part of the reason Berkshire was the only buyer they considered. In a somewhat unusual move, Berkshire appointed a new CEO at Pilot after taking over this year and made the accounting change at the heart of the dispute.

Truck stops provided a Meaningful payment For Berkshire’s revenues and profits this year.

Berkshire’s decision to shift to so-called “top-down accounting” this year forced Pilot to take on higher depreciation and amortization costs, resulting in lower net income, according to the lawsuit.

The Haslams tried unsuccessfully to argue at Pilot board meetings that the company should not make the change or at least that the new accounting method should not be used to determine the value of its stake, but they were outmaneuvered by the five Berkshire members on the committee.

So Hassan Sr. appealed directly to Buffett, but the lawsuit says all the venerable investor would say was assert that Berkshire would abide by the terms of the contract they all signed in 2017.

As part of the deal, Berkshire bought 38.6% of Pilot in 2017 for $2.758 billion before doubling that amount to 80% this year for an additional $8.2 billion. Buffett said Berkshire shareholders This spring, he wished he could buy the entire company at once because the price was better in 2017, but the Haslam family wouldn’t sell it all at that time.

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

The Haslam family has an option once a year to decide whether they want to sell their remaining stake. The family has asked the court to intervene and force Pilot to revert to the accounting method it was using before they had to make that decision early next year.