Berkshire completes Acquisition of Pilot

Berkshire Hathaway Buys Pilot Truck Stops

Berkshire purchases the remaining 20% of Pilot Gas Stations the largest operator of travel centers in North America

Pilot Gas Stations the largest operator of travel centers in North America

Warren Buffett’s Berkshire Hathaway announced on Tuesday that it had bought out the Haslam family’s remaining 20% share of Pilot Travel Centers, the largest operator of travel centers in North America. The deal was finalized after the two parties settled a lawsuit over the valuation of the minority stake earlier this month. The terms of the settlement and the deal were not disclosed.

Berkshire Hathaway had gradually acquired 80% of Pilot Travel Centers, or PTC, for $11 billion over six years. According to the original agreement, Pilot Corporation, the Haslam family’s entity, had the option to sell its 20% stake to Berkshire Hathaway every year starting from January 2024. The price was based on a formula that multiplied PTC’s adjusted earnings before interest and taxes by 10. This means that the value of the company, Pilot Travel Centers, was calculated by taking its earnings before interest and taxes (EBIT) and adjusting it for some factors, such as depreciation, amortization, or other expenses. Then, this adjusted EBIT was multiplied by 10, which is a common valuation method for businesses. This formula gave the price that Berkshire Hathaway had to pay to buy the remaining stake in Pilot Travel Centers from the Haslam family.

Pilot Travel Centers are the largest operators in North America.
Pilot Travel Centers are the largest operators in North America.

The lawsuit stemmed from a disagreement over the accounting method used to calculate PTC’s earnings. Pilot Corporation claimed that Berkshire Hathaway had manipulated PTC’s financials to lower its profitability and reduce the deal price by up to $1.2 billion. Berkshire Hathaway denied the allegations and accused Jimmy Haslam, the co-owner of Cleveland Browns and the son of PTC’s founder, of trying to inflate PTC’s earnings by bribing employees. Haslam rejected the accusations.

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The two-day, non-jury trial in Delaware’s Court of Chancery, which was cancelled by the court on Saturday, was meant to determine the value of the Haslam family’s remaining 20% stake in Pilot Travel Centers, the largest U.S. truck stop chain. The Haslams, including Cleveland Browns football team owner Jimmy Haslam, sold 80% of Pilot to Berkshire for $11 billion in two separate deals in 2017 and January 2023.

The settlement averts a billion-dollar trial between Berkshire Hathaway and the Haslam family, which had been set to begin on Monday. The agreement also ends the uncertainty over the ownership of PTC, which operates more than 900 travel centers across the U.S. and Canada.

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Pilot Travel Centers is a promising investment for Berkshire Hathaway, as it benefits from the growing demand for trucking services and fuel in the U.S. economy. PTC also offers a range of amenities and services for professional drivers and travelers, such as food, parking, showers, Wi-Fi, and loyalty programs.

Source:

Berkshire Hathaway Press Release 1-16-24

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