Berkshire and Haslam Settle: Buffett's Path to Full Ownership?

Key Takeaway

Berkshire Hathaway settles with Pilot Travel Centers, avoiding trial over a dispute on buyout terms; details undisclosed but clears path for Buffett to acquire remaining 20%.

Berkshire Hathaway Settles Pilot Travel Sale Claims

• Warren Buffett’s Berkshire Hathaway has settled allegations of violating the terms of its buyout of truck-stop-chain Pilot Travel Centers by changing accounting methods.
• The settlement, reached on the eve of trial, is likely to clear the way for Buffett to purchase the remaining 20% stake in Pilot Travel from Haslam later this month under terms of the original acquisition.
• Details of the settlement have not been made public, but it will result in both sides dismissing all claims against each other.

Legal Battle Between Billionaires

• The case set up a bitter legal battle between Warren Buffet and Jimmy Haslam over accusations that accounting method changes would cut the value of Haslam's holdings by $1.2 billion if he chose to sell his remaining stake to Buffett.
• Federal prosecutors are investigating whether promised payments from Haslam to Pilot Travel executives amount to bribes that violate federal law.
• The cancellation of Monday's trial means that neither Buffett nor Haslam will testify live in court.

Potential Impact on Business Operations

• As part of the case, Buffett’s lawyers accused Haslam of bribing Pilot Travel executives with promises of millions in bonuses to influence their short-term business decisions and potentially impact short-term earnings.
• Decisions made by gas and diesel buyers could have a major effect on short-term earnings according to earlier court filings from Berkshire Hathaway.

STREET VIEWS

• Warren Buffett (Neutral):

  "The settlement resolves a case that set up a bitter legal battle between the two billionaires."