Jimmy Haslam, CEO of Pilot Flying J. and Warren Buffett, Chairman and CEO of Berkshire Hathaway.
Lacy O’Toole | CNBC
Berkshire Hathaway has settled a billion-dollar lawsuit with the Haslam family over how Berkshire accounted for the value of Pilot Travel Centers, the two parties said Sunday night.
The settlement avoided a trial scheduled to begin Monday in Delaware Chancery Court to resolve the dispute.
The Haslam family and its Pilot Corp. had alleged Berkshire Hathaway improperly adopted a form of accounting that would have led to a sharply lower price Berkshire would pay to acquire the family’s remaining 20% stake in Pilot Travel Centers.
Berkshire in turn had accused Jimmy Haslam of offering payments to PTC executives to boost the value of the company so that his family would get a bigger buyout from Berkshire.
Last month, it was reported that federal prosecutors in New York were investigating allegations about Jimmy Haslam.
Berkshire and Pilot Corp. — which the Haslam family owns — said they had reached an agreement to fully settle the Delaware litigation between Pilot Corporation and Berkshire Hathaway Inc., Pilot Travel Centers LLC, and National Indemnity Company, including the dismissal of all claims and counterclaims.
“The trial scheduled in this matter for January 8 and 9, 2024, is hereby canceled and has been removed from the Court’s calendar,” a notice on the Chancery Court’s docket read.
The trial’s cancellation late Saturday came two days after a brief conference held by a judge in the case with the lawyers for Berkshire Hathaway and the Haslams to discuss the logistics of the trial.
Buffett’s designated successor Greg Abel was expected to testify at the trial, whose outcome could have led to Berkshire paying up to $1.2 billion more for the Haslams’ stake in the company than Berkshire otherwise would pay.
Berkshire owns 80% of PTC after having spent $11 billion in separate purchases in 2017 and then again last January to buy out the majority stake owned by the Haslams.
The Haslams had a “put option” to compel Berkshire to buy out their remaining 20% state within a 60-day window every year thereafter.
Last year, the family sued Berkshire, alleging that the conglomerate had used so-called pushdown accounting that would have the effect of lowering the stated value of PTC, and thus short the Haslams on what would be legally owed to them.
The Haslams said that form of accounting was not authorized by them.
Berkshire in turn had argued that its use of pushdown accounting was not a change in accounting policy that was barred by its purchase agreement with the Haslams.
