The Haslam family is suing Warren Buffett’s Berkshire Hathaway, which owns Pilot Co., accusing the conglomerate of using improper accounting to devalue the Haslams’ remaining 20% stake in the travel centers, according to Reuters.
The Haslam family, which includes Cleveland Browns owner Jimmy Haslam, in 2017 sold 38.6% of Pilot to Berkshire Hathaway for $2.8 billion and, in January, 41.4% more for $8.2 billion, Reuters said. The family “said it has a right to sell the remainder under the same valuation methods on Jan. 1, 2024.”
Berkshire has unilaterally and without consent adopted “pushdown” accounting rules that artificially reduce Knoxville, Tennessee-based Pilot’s earnings before interest and taxes and “grossly” reduce how much the Haslams would get if they sold their remaining stake, according to a complaint made public in Delaware Chancery Court on Thursday, Reuters reported.
The Haslam family repeatedly objected, but Buffett would not agree not to use pushdown accounting, the complaint said. Rather, Buffett told Pilot founder and Jimmy Haslam’s father, James Haslam II, in October, “I said that Berkshire will comply with the terms of the contract. That’s exactly what will happen,” Reuters reported.
Kristin Seabrook, chief legal counsel and secretary at Pilot Travel Centers, said in a statement shared with CSP, “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 Co. As the nation’s leading travel center network, we are committed to showing people they matter at every turn.”
She added, “As this is an ongoing legal matter, we will have no further comment.”
“The Oct. 23 complaint,” Reuters said, “seeks to ensure that the Haslams’ 20% stake is valued properly, and halt what it alleges is Berkshire’s improper accounting.” The complaint also said that defendants include several Pilot directors, including Berkshire Vice Chairman Greg Abel, who is expected to succeed Buffett as Berkshire’s chief executive.