Pilot Company, Berkshire Hathaway reach settlement in Pilot Travel Centers’ value dispute

Just one day before their scheduled trial, Pilot Company and Berkshire Hathaway have reached a settlement to end a contentious $1 billion lawsuit.

Pilot, on behalf of the company and the Haslam family, announced on Sunday, Jan. 7 that it had reached an agreement to fully settle litigation between Berkshire and Pilot Travel Centers. The announcement came on the eve of a two-day trial scheduled for Monday and Tuesday, Jan. 8 and 9.

No details of the settlement have been made publicly available. In a statement issued by Pilot, the settlement includes “the dismissal of all claims and counterclaims against each other.”

The settlement could pave the way for Jimmy Haslam to sell his remaining 20% stake in Pilot Travel Centers. In 2017, Berkshire acquired 38.6% of Pilot for nearly $3 billion. In January, Berkshire paid more than $8 billion for an additional 41.4% stake in the company. Per the contract, Haslam has the option each year to sell his remaining stake. That option began on Jan. 1.

With potentially billions of dollars on the line, Berkshire and Haslam have accused each other of illegally affecting the value of Pilot Travel Centers in the final months leading up to Haslam’s option to sell.

In October, Haslam filed a lawsuit against Berkshire claiming the company artificially deflated the value of Pilot Travel Centers. Specifically, the lawsuit claimed that Berkshire used unauthorized accounting techniques that lowered the value of Pilot Travel Centers in 2023. Berkshire took control of Pilot Travel Centers last January.

One month after Haslam filed the lawsuit, Berkshire filed a countersuit, claiming Haslam devised a scheme to inflate the value of Pilot Travel Centers. Specifically, Haslam was accused of secretly promising “massive” side payments to numerous high-level Pilot Travel Centers employees. Those payments, Berkshire argued, induced the employees to prioritize Pilot’s short-term 2023 earnings over the company’s long-term value.

Both lawsuits are tied to Haslam expecting to exercise his option to sell his remaining 20% stake in Pilot Travel Centers. Haslam’s lawsuit claimed Berkshire’s accounting method deliberately lowered the value of Pilot Travel Centers so that Berkshire would pay as much as $1 billion less for the remaining stake. Conversely, Berkshire’s lawsuit claimed Haslam’s actions were an attempt to pump up the value in an effort to get more out of his 20% stake.

Federal investigation

Although the settlement puts an end to this dispute, it is unclear what that means for a possible federal investigation.

During a December court hearing at the Delaware Chancery Court in Wilmington, it was revealed that federal prosecutors in the Southern District of New York were looking into Berkshire’s claims of Haslam’s backdoor payments to Pilot Travel Centers executives.

Bloomberg reported that Pilot officials were made aware of the federal investigation while collecting pre-trial information for Haslam’s lawsuit.

A spokesperson for the U.S. Attorney’s Office for the Southern District of New York declined Land Line’s request for verification of the investigation.

Statements issued by both Berkshire and Pilot mention only a settlement in the “Delaware litigation.” LL