Berkshire Settles Pilot Travel Sale Claims on Eve of Trial
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Warren Buffett’s Berkshire Hathaway has avoided trial by settling allegations it violated the terms of its buyout of truck stop chain Pilot Travel Centers by changing the accounting methods used to value the last part of the deal.
Berkshire — which acquired an 80% stake in Pilot Travel for more than $10 billion from billionaire Jimmy Haslam — was accused of improperly changing the accounting methods to short charge the Haslam family out of their remaining 20%. The two parties reached a settlement on the eve of the trial, representatives of both Haslam and Buffett confirmed.
Although details of the settlement haven’t yet been made public, the deal is likely to clear the way for Buffett to purchase the remaining 20% of Pilot Travel from Haslam later this month under terms of the original acquisition. The accord means both sides will dismiss all claims against each other, according to spokespeople for both billionaires.
A docket filing in Delaware Chancery Court said the trial, scheduled for Jan. 8 in Wilmington before Judge Morgan Zurn, had been cancelled. Haslam, the owner of the NFL’s Cleveland Browns, was expected to testify live in the trial, but Buffett was not.
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The settlement resolves a case that set up a bitter legal battle between the two billionaires. Haslam contended Pilot Travel executives installed by Buffett changed quarterly earning accounting methods in a way that cut the value of his holdings by $1.2 billion if the Tennessee-based billionaire chose to sell Buffett his remaining stake.
As part of the case, Buffett’s lawyers accused Haslam of bribing Pilot Travel executives with promises of millions in bonuses to allegedly influence their short-term business decisions. Buffett says those promises were made in hopes of juicing quarterly earnings in order to pump up the value of his 20% stake. Federal prosecutors in Manhattan are investigating whether Haslam’s promised payments amount to bribes that violate federal law.
Buffett’s attorneys said Haslam admitted in pre-trial depositions to making promises about payments out of his own pocket to more than 15 Pilot Travel senior executives, along with some managers in the truck stop chain’s fuel division. Berkshire noted in earlier court filings that decisions made by gas and diesel buyers could have a major effect on short-term earnings.
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