UPDATE: Berkshire Hathaway paid $2.76 billion for its 38.6% stake in Pilot Travel Centers LLC, according to an insurance filing cited by Bloomberg. Berkshire didn’t disclose the purchase price when it announced the deal in October, and it hasn’t revealed the figure in subsequent reports to the U.S. Securities and Exchange Commission.
OMAHA, Neb. -- “The CEO job self-selects for ‘can-do’ types,” said Warren Buffett, chairman of Berkshire Hathaway Inc., in his always-anticipated annual letter to shareholders, in which he criticized overzealous acquisition but singled out for praise the holding company’s investment in truckstop network Pilot Flying J.
“If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it’s a bit like telling your ripening teenager to be sure to have a normal sex life. Once a CEO hungers for a deal, he or she will never lack for forecasts that justify the purchase,” said Buffett, known as the Oracle of Omaha, of the “purchasing frenzy” evident in 2017 acquisition activity.
“Subordinates will be cheering, envisioning enlarged domains and the compensation levels that typically increase with corporate size. Investment bankers, smelling huge fees, will be applauding as well. (Don’t ask the barber whether you need a haircut.) If the historical performance of the target falls short of validating its acquisition, large ‘synergies’ will be forecast. Spreadsheets never disappoint,” he said.
Nevertheless, Buffett said, “we were able to make one sensible stand-alone purchase last year, a 38.6% partnership interest in Pilot Flying J.”
With more than 750 truckstops in the United States and Canada, most in the United States, Knoxville, Tenn.-based Pilot Flying J came in at No. 9 in a year-end update of CSP’s Top 202 ranking of U.S. convenience-store chains by size.
Here’s Buffett take on Pilot Flying J …