Breaking News
1. US strikes Iran’s nuclear sites: Vice President JD Vance says war is with weapons programme, not people      2. '2,200km Away': Israel strikes Khorramshahr missile storage facilities in Iran for first time      3. "Why Wouldn't There Be Regime Change?" Trump's 'MIGA' Message For Iran      4. Iran moves to block Strait of Hormuz: What this will mean for India, Tehran, world, in 4 points      5. Satellite Images Question Trump's Claim Iran's Atomic Sites Destroyed      6. Netanyahu's First Remark After US Bombs Iran Nuclear Sites      7. Operation Sindhu: Nepal thanks India for Iran evacuation      8. Israel kills three Iranian military chiefs, hits nuclear sites in fresh air strikes.      9. US Bombers Flew 37 Hours Non-Stop, Refuelled Mid-Air To Hit Iran Nuclear Sites      10. Iranians killed, UN warns of refugee crisis; Tel Aviv strikes Isfahan nuclear plant for 2nd time      11. Provided food, shelter': 2 held for harbouring Pahalgam attack terrorists; disclose 3 were Pak LeT men      12. Iran, Israel Launch Fresh Attacks As Tehran Rules Out Nuclear Talks      13. Israel-Iran war: Donald Trump counters Tulsi Gabbard on Iran's nuclear programme; says 'my intelligence community was wrong'      14. Pak nominates Trump for Nobel Prize for 'pivotal leadership' in truce with India      15. Trump indicates he’s disinclined to restrain Israel ‘when it’s winning’ against Iran      16. PM Modi leads 11th International Yoga Day celebrations from Visakhapatnam      17. Missile strike on hospital to calls for Khamenei's elimination      18. ‘Saw missiles and drones’: Indian students evacuated from Iran arrive in Delhi, hail support from embassy      19. Air India warned for flying Airbus planes with unchecked escape slides      20. Donald Trump to decide on US role in Iran-Israel conflict within two weeks, says White House     

Legal Battle Unfolds as Berkshire Hathaway Faces $10 Billion Accounting Lawsuit

  • Posted on October 27, 2023
  • Business
  • By Arijit Dutta
  • 356 Views

Berkshire Hathaway, the conglomerate led by Warren Buffett, is embroiled in a legal dispute over its $10 billion acquisition of truck-stop-chain Pilot Travel Centers. An unsealed lawsuit alleges that Berkshire violated the terms of the acquisition by altering the accounting methods used to assess a significant part of the deal.

Legal Battle Unfolds as Berkshire Hathaway Faces $10 Billion Accounting Lawsuit Image Source -www.bloomberg.com

Berkshire Hathaway, the conglomerate led by Warren Buffett, is embroiled in a legal dispute over its $10 billion acquisition of truck-stop-chain Pilot Travel Centers. An unsealed lawsuit alleges that Berkshire violated the terms of the acquisition by altering the accounting methods used to assess a significant part of the deal.

The original agreement saw Berkshire Hathaway purchase approximately 39% of Pilot Flying J, a truck-stop provider owned by the Haslam family, for $2.75 billion in 2017. The deal stipulated that Buffett would acquire a controlling stake by a set date. In January, Buffett paid $8.2 billion to secure an additional 41% share, resulting in an 80% ownership of the business.

As part of the deal, the Haslam family retained the option to sell their remaining 20% stake to Berkshire on January 1, 2024, using the same valuation methods applied to the prior purchases. However, they claim that Berkshire's financial team modified the accounting rules pertaining to the largest US truck-stop business, diminishing the value of the so-called put right.

Pilot Travel Centers has vehemently opposed Berkshire's shift to pushdown accounting rules. According to the complaint filed in the Delaware Chancery Court, these changes unfairly disadvantage Pilot while favoring Berkshire, as argued by the chain's legal representatives.

Debbie Bosanek, a spokesperson for Berkshire Hathaway, has not yet responded to requests for comments regarding the lawsuit.

The acquisition has proven lucrative for Berkshire, with Pilot Flying J contributing $9.5 billion in revenue and $83 million in net earnings in the first quarter of this year. Strong second-quarter earnings further boosted Berkshire's performance.

The Haslam family believes that the accounting alterations will significantly devalue the remaining 20% of the truck-stop company. They seek legal intervention to prevent Buffett from using these changes in violation of the acquisition agreement. However, the specific estimates of the potential value loss are redacted in the lawsuit.

Also Read: Kareena Kapoor's History With Sanjay Leela Bhansali Revealed

The Haslam family asserts that a majority of Berkshire's appointees, who now control the chain's board, have thwarted efforts to reverse the pushdown-accounting rules, and Buffett has refused to provide assurances regarding the valuation of the remaining 20%, akin to the earlier stakes.

Pilot Flying J, based in Knoxville, Tennessee, had been under the leadership of the Haslam family since 1996. Jimmy Haslam, the owner of the NFL's Cleveland Browns, has been at the helm of the team since 2012. The acquisition from Randy Lerner, son of billionaire credit-card magnate Al Lerner, marked a significant investment in the NFL franchise.

This legal battle underscores the complexities of high-stakes business acquisitions and their financial implications, raising questions about the integrity of accounting practices.

Author
No Image
Author
Arijit Dutta

You May Also Like