A pair of billionaires appear to be duking it out in the courts over the cost of controlling the chain of Pilot Travel Centers.
Warren Buffett, the frontman for Berkshire Hathaway, reportedly owns 80 percent of the vast network of more than 800 truck stops. Jimmy Haslam, who owns the NFL’s Cleveland Browns, Columbus Crew of Major League Soccer, and a percentage of the NBA’s Milwaukee Bucks, holds a 20 percent stake in the Pilot Flying J network. Along with control over the massive trucking service enterprise, some speculate the bruhaha is also about street cred for the one-percenters. Buffett’s net worth runs north of $117 billion. By comparison, Haslam’s wealth is a meager $8.8 billion.
According to reports, both Buffett and Haslam claim the other engaged in unethical practices to manipulate Pilot revenues. Buffett’s allegations include bribery of Pilot executives to boost company profits, at least on paper.
“We called Berkshire’s allegations wild inventions in our opposition brief,” attorney Anitha Reddy, who represents the Haslam family, reportedly said. “I don’t think we could have been clearer that we dispute them. And if there is any doubt in Berkshire’s mind, we think they’re false and we intend to defeat them on whatever schedule the court orders.”
Haslam’s claims involve the 80 percent stakeholder’s changing accounting practices to make it appear the chain is earning less. The strategy for each is to alter the value — up or down — of the company to their benefit when Berkshire Hathaway moves to acquire the remaining 20 percent. Berkshire Hathaway bought its 80 percent holdings over the last six years.
In 2017, it doled out a reported $2.76 billion for 39 percent of the organization. Earlier this year, the Buffett-led corporation paid $8.2 billion to bring its stake to 80 percent. But the caveat driving the finger-pointing appears to be a stipulation that Berkshire Hathaway would be on the hook for 10 times the company’s values based on the previous year’s earnings. Haslam claims Buffett’s people have changed the way Pilot calculates profits and losses, a practice called “pushdown accounting.” If successful, lowering the 2023 earnings could save Berkshire Hathaway billions.
A judge is expected to sort out each party’s allegations during a trial scheduled for January 2024. Unless Haslam and Buffett reach a consensus, the trial will likely determine the value and price tag for the remaining 20 percent.
Sources:
Leave a Comment