Berkshire Hathaway Buys Stake in Pilot Flying J Travel Centers

Lloyd Doyle
October 3, 2017

Warren Buffett's Berkshire Hathaway Inc. on Tuesday made a bet on American truckers with a deal to acquire almost 40% of the operator of Pilot and Flying J travel centers.

The Knoxville, Tenn. -based family-owned Pilot Travel Centers LLC, better known as Pilot Flying J, has 750 locations in the USA and Canada where truckers and drivers refuel, eat and shop. Jimmy Haslam will also remain as the CEO of the chain and its current management team will be sticking around.

In the transportation space, Mr. Buffett's biggest deal was for BNSF in 2009.

Beyond truck stops, Buffett's unexpected investments include companies such as Duracell, the Pampered Chef, See's sweets and toy/party supply company Oriental Trading Co.

Buffett says that might just encourage more companies to stash money outside the United States in hopes of getting a tax break.

"We weren't actively looking for a partner", said Mr. Haslam, 63 years old. He bought Maryville-based Clayton Homes, the country's biggest producer of manufactured housing, for $1.7 billion in 2003.

Buffett's reputation and Clayton's praise for working with Berkshire Hathaway helped prove deciding factors in the sale, Haslam said.

Pilot Flying J has faced scrutiny in recent years after authorities accused employees of withholding diesel fuel rebates from customers.

Haslam said in an interview with CNBC on Tuesday that the deal with Buffett was a fit because Berkshire was a "long-term investor" and "hands off".

Talks began in early May, and negotiations picked up steam by July. Buffett will boost his stake to 80% at that point, leaving the Haslams with 20% of the business. (NYSE:BRK.A,BRK.B) has acquired a significant stake in Pilot Flying J.

The company paid a $92 million settlement to trucking customers after a 2013 raid by the Federal Bureau of Investigation and the Internal Revenue Service.

"That's not good for capitalism, it's not good for the children, and I sure don't think it's good for society where there's already a ton of inequality to start with", Buffett said, referring to the heirs of large estates.

Despite these challenges, Buffett said it's "a real possibility" that Congress would pass a bill and that the chances were "higher than most people think". "There is nothing that we own that doesn't have something in the future that might affect it".

Other reports by Iphone Fresh

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