© Reuters. FILE PHOTO: A Pilot Flying J travel center is pictured in Channelview, Texas, U.S., Oct. 31, 2021. REUTERS/Gary McWilliams/File Photo
By Jonathan Stempel
(Reuters) – Warren Buffett’s Berkshire Hathaway (NYSE:) is being sued by the billionaire Haslam family, which accused the conglomerate of using improper accounting to devalue its remaining 20% stake in Pilot Travel Centers, the largest U.S. truck stop operator.
The family, including Cleveland Browns football team owner Jimmy Haslam, sold Berkshire a 38.6% Pilot stake for $2.8 billion in 2017 and another 41.4% stake for $8.2 billion in January. It said it has a right to sell the remainder under the same valuation methods on Jan. 1, 2024.
According to a complaint made public on Thursday in Delaware Chancery Court, Berkshire has unilaterally and without consent adopted “pushdown” accounting rules that artificially reduce Pilot’s earnings before interest and taxes, and “grossly” reduce how much the Haslams would receive if they sold their remaining stake.
The complaint said the family objected repeatedly, but Buffett refused to commit not to use pushdown accounting.
It said he instead told Pilot founder and Jimmy Haslam’s father James Haslam II this month: “I said that Berkshire will comply with the terms of the contract. That’s exactly what will happen.”
Buffett’s assistant did not immediately respond to a request for comment after market hours.
Kristin Seabrook, Pilot’s chief legal counsel, in a statement said the lawsuit concerned “a narrow issue between owners,” and declined further comment about it.
The Oct. 23 complaint seeks to ensure that the Haslams’ 20% stake is valued properly, and halt what it alleges is Berkshire’s improper accounting.
Estimates about how much of a “windfall” the Haslams said Berkshire would receive at their expense because of its accounting were redacted.
Several Pilot directors including Greg Abel, a Berkshire vice chairman expected to succeed Buffett as Berkshire’s chief executive, are also defendants, according to the complaint.
Pilot is based in Knoxville, Tennessee, and has approximately 800 locations in the United States and Canada.
It generated $197 million of net income for Omaha, Nebraska-based Berkshire on $24.3 billion of revenue from February to June, according to Berkshire’s second-quarter report.
Buffett is 93, and the elder Haslam is 92. Haslam’s other son Bill Haslam is a former Tennessee governor. Jimmy Haslam is worth $8.7 billion according to Forbes magazine.
The case is Pilot Corp v Abel et al, Delaware Chancery Court, No. 2023-1068-MTZ.
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