Warren Buffett's Berkshire Hathaway to own majority of Pilot Flying J

By Tyson Fisher, Land Line staff writer | Tuesday, October 03, 2017

Pilot Flying J has just inked a deal for a dramatic shift of ownership in the coming years. Warren Buffett’s Berkshire Hathaway will acquire nearly 40 percent of PFJ stake. In 2023, Berkshire will own a majority stake, transferring power from the hands of the Haslam family.

According to a news release, Berkshire’s initial minority investment of 38.6 percent will allow the Haslams to continue to own a majority 50.1 percent of PFJ, with Jimmy Haslam remaining chief executive officer. Management team, president and headquarters in Knoxville, Tenn., also will remain.

The Haslams’ 50.1 percent ownership and FJ Management’s 11.3 percent will stay intact until 2023. Berkshire will acquire an additional 41.4 percent in 2023, giving Buffett’s holding company an 80 percent majority stake. After 2023, the Haslams will maintain 20 percent ownership and remain involved with PFJ.

“Given the impeccable reputation of Warren Buffett’s Berkshire Hathaway, and our shared vision and values, we decided this was an ideal opportunity,” Jimmy Haslam said in a statement. “As a family business that has evolved and prospered over the last six decades, we knew that any potential partner would need to share our commitment and have a proven track record as a long-term investor.”

Pilot Flying J is the largest operator of travel centers in North America with more than 750 locations in 43 states and six Canadian provinces, according to its website. The company employs more than 26,000 people.

James A. "Jim" Haslam II opened the first Pilot on Nov. 20, 1958, in Gate City, Va. Within 10 years, Pilot had 21 locations in the Tennessee, Kentucky and Virginia region. James A. "Jimmy" Haslam III joined Pilot’s board in 1975 at the age of 20. Jimmy Haslam would be named CEO in 1996 after the company grew to nearly 150 locations with more than 5,000 employees. Pilot Travel Centers and Flying J merged in 2010, creating Pilot Travel Centers LLC, which known as Pilot Flying J.

Buffett has been widely known for acquiring family-owned businesses. Berkshire has a reputation of keeping business as usual while maintaining a long-term investment, rather than other investment models that include making changes and selling at a profit.

In a letter to investors, Buffett mentioned family-owned businesses that plan to sell have two option: sell to a competitor or sell to a “Wall Street buyer.” Buffet informed investors of a third option that Berkshire offers:

“Berkshire offers a third choice to the business owner who wishes to sell: a permanent home, in which the company’s people and culture will be retained (though, occasionally, management changes will be needed). Beyond that, any business we acquire dramatically increases its financial strength and ability to grow. Its days of dealing with banks and Wall Street analysts are also forever ended.”

Berkshire has ownership with BNSF Railway, Duracell, Fruit of the Loom, Geico, Helzberg Diamonds, Justin Brands, Kraft Heinz, Nebraska Furniture Mart and dozens of other companies. In 2016, Berkshire had total assets valued at more than $600 billion with a net income of more than $24 billion.

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