The legal dispute between Berkshire Hathaway and Jimmy Haslam over the valuation of Pilot Travel Centers has taken a new turn with Berkshire filing a countersuit in Delaware Chancery Court.
In this countersuit, Berkshire accuses Haslam of orchestrating a scheme to promise secret payments to high-level Pilot employees. I Photo: Cleveland Browns
In this countersuit, Berkshire accuses Haslam of orchestrating a scheme to promise secret payments to high-level Pilot employees.
The alleged purpose of these payments was to inflate short-term profits at Pilot, influencing the valuation that Berkshire would have to pay for the Haslam family's 20% stake in the truck stop operator.
According to Berkshire's filings, the company learned about Haslam's alleged scheme in the same month it filed the countersuit.
The claim suggests that the promised payments created a situation where high-level Pilot employees were incentivized to make short-term decisions that would boost the Haslams' profit at the expense of Pilot's long-term value.
In response to Berkshire's accusations, the Haslam family had previously filed a complaint, accusing Berkshire of changing its accounting for Pilot to intentionally lower the business's profit.
The profit figure is crucial as it is used to determine the price Berkshire would have to pay if the Haslam family were to exercise a put option to sell its 20% stake in Pilot early next year.
Berkshire's countersuit seeks an injunction to prevent the Haslams from exercising their option in 2024. Additionally, Berkshire aims to prevent any distortion of Pilot's financial results through unauthorized payments to employees.
This legal battle adds a layer of complexity to the existing disagreement between the two parties over the valuation of Pilot Travel Centers, which Berkshire Hathaway acquired an 80% stake in for $11 billion in 2017 and early 2023.
The estimated value of the remaining 20% is at the center of the dispute, with Berkshire claiming it would be worth $3.2 billion without the alleged accounting change by the Haslam family.