© Reuters. FILE PHOTO: Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc’s annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott
By Jonathan Stempel
NEW YORK (Reuters) – Berkshire Hathaway (NYSE:), the conglomerate led by billionaire Warren Buffett, paid $2.6 billion last month for the 20% of the Pilot Travel Centers truck stop business it did not already own, after resolving a lawsuit over the price.
The price means Berkshire paid about $13.6 billion for Pilot, which operates more than 725 locations in the U.S. and Canada, and sold 13 billion gallons of fuel in 2022.
Berkshire disclosed the purchase price in its annual report on Saturday.
Pilot, sometimes known as Pilot Flying J, had been founded in 1958 by Jim Haslam after he paid $6,000 for a Virginia gas station. It was later run by Jimmy Haslam, the billionaire owner of the Cleveland Browns football team.
Berkshire paid $2.76 billion in 2017 for 38.6% of Pilot and $8.2 billion for another 41.4% in January 2023, and subsequently overhauled its management.
Pilot, based in Knoxville, Tennessee, added $603 million to Berkshire’s profit in 2023.
The Haslams had an annual 60-day window to sell their last 20% of Pilot, with the price based on its profits.
In competing lawsuits in Delaware Chancery Court, each side accused the other of manipulating Pilot’s accounting in bad faith, with the Haslams saying Berkshire was undervaluing its stake, and Berkshire concerned it might overpay.
Buffett did not mention Pilot in his annual letter to Berkshire shareholders, also released on Saturday, but offered an anecdote about the risk of disappointment in acquisitions.
He recalled how Hugh McCulloch, the first comptroller of the United States, warned national banks in 1863 not to deal with a “rascal” even if they believed they could avoid being cheated.
“Many bankers who thought they could ‘manage’ the rascal problem have learned the wisdom of Mr. McCulloch’s advice–and I have as well,” Buffett said. “People are not that easy to read. Sincerity and empathy can easily be faked. That is as true now as it was in 1863.”
Berkshire did not immediately respond to a request for comment on Saturday.
Buffett said last May that he wished he could have bought all of Pilot in 2017, but the Haslams did not want to sell.
This story originally appeared on Investing
