Berkshire Hathaway Buys 38.6% of Pilot Flying J

Warren Buffett to Boost Stake to 80% in 2023
Pilot Flying J station
John Sommers II for Transport Topics

Warren Buffett’s Berkshire Hathaway Inc. bought a stake in Pilot Travel Centers LLC, owner of the Pilot Flying J truck stop chain, and detailed plans to become the company’s biggest shareholder in six years.

Berkshire Hathaway agreed to acquire 38.6% of Pilot Flying J, a closely held company based in Knoxville, Tenn., according to a statement Oct. 3. The Haslam family will continue for now to hold the majority of Pilot Flying J, with Cleveland Browns owner Jimmy Haslam remaining as chief executive officer of the company.

The Maggelet family’s FJ Management Inc. will keep its 11.3% stake in Pilot Flying J until 2023, when Buffett plans to become the company’s biggest shareholder. Buffett will boost his stake to 80% at that point, leaving the Haslams with a fifth of the business. Financial terms of the deal weren’t disclosed.

Haslam said in an interview he hit it off with Buffett after being introduced earlier this year by Chicago merchant banker Byron Trott, who suggested the Berkshire chairman buy a minority stake in the truck stop operator. Pilot Flying J generates annual revenue of more than $20 billion and was named the 15th largest private company in the U.S. by Forbes magazine.

“Jimmy Haslam and his team have created an industry leader and a key enabler of the nation’s economy,” Buffett, 87, said in the statement. “We look forward to a partnership that supports the trucking industry for years to come.”

Trott’s BDT Capital Partners is selling its minority stake in Pilot Flying J as part of the transaction.

Trucks are going to be around for a very long time. Who knows when driverless trucks are going to come along and what level of penetration they have.

Warren Buffett

The investment marks a return to large dealmaking for Buffett, who’s had a relatively quiet 2017 after walking away from a $143 billion attempt to acquire Anglo-Dutch consumer goods giant Unilever. His bid to acquire Oncor Electric Delivery Co. was bested by Sempra Energy in August, after activist investor Paul Singer bought up the target’s debt to block Buffett and back the rival suitor.

Pilot Flying J started life as a single Pilot gas station in Gate City, Va., in 1958. It now has more than 750 locations across North America and employs 27,000 people. Buffett said by phone he isn’t going to lose sleep over potential threats from autonomous vehicles.

“Trucks are going to be around for a very long time. Who knows when driverless trucks are going to come along and what level of penetration they have,” Buffett said in an interview. “There is nothing that we own that doesn’t have something in the future that might affect it.”

Pilot Flying J has been run by Haslam, the son of Pilot Corp. founder Jim Haslam, since 1996. The brother of Tennessee governor Bill Haslam, Jimmy has owned the Cleveland Browns National Football League franchise since 2012, when he paid more than $1 billion to buy control of the team from Randy Lerner.

Pilot’s former president, Mark Hazelwood, and three other former executives under indictment are set to go on trial Oct. 31 in federal court in Chattanooga, more than four years after an FBI raid on the headquarters of Pilot Flying J following an investigation into diesel fuel rebate fraud. Jimmy Haslam has not been accused in the multimillion dollar rebate scheme. Fourteen former Pilot sales executives have previously been charged, pleaded guilty and agreed to cooperate with the government while awaiting sentencing.

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