Author Topic: Berkshire acquisition of Pilot Flying J - long term 80 per cent  (Read 6707 times)

John Hjorth

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Re: Berkshire aquisition of Pilot Flying J - long term 80 per cent
« Reply #10 on: October 08, 2017, 03:49:44 AM »
Thank you, scorpioncapital,

I found it: Omaha World-Herald: Warren Watch: In contest to pick next $5 billion-plus purchase by Warren Buffett, no one saw this comming.

The article refers to a Bloomberg article, which is here: Bloomberg: Buffett's Berkshire Hathaway Buys Stake in Pilot Flying J.

In the article:

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Financial terms of the deal weren't disclosed, but the Bloomberg Billionaraires Index values the business at $9.1 billion, and calculates the Haslam family's 50.1 percent stake at $4.5 billion.
« Last Edit: October 08, 2017, 03:59:23 AM by John Hjorth »
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longtermdave

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Re: Berkshire aquisition of Pilot Flying J - long term 80 per cent
« Reply #11 on: November 28, 2017, 05:53:50 PM »
gg & xo 1,

Sound sceptisism has never hurt anyone. There was a link to an interview with Mr. Buffett here on CoBF yesterday, where Mr. Buffett mentioned, that he was aware of that case.

Do you have some sources to share, to drag us all out of our ignorance?
Here is a link to a Department of Justice news release: https://www.justice.gov/usao-edtn/pr/pilot-flying-j-enters-criminal-enforcement-agreement

Here is a link to a local Tennessee paper with an update:  http://www.knoxnews.com/story/news/crime/2017/07/25/whos-still-headed-trial-pilot-flying-j-case/506800001/

I live in Cleveland (where Mr. Haslam owns the NFL Cleveland Browns), so it was a very large story locally. 

With respect to BRK investing in other ethically questionable companies, perhaps, although I believe Pilot is different than buying a publicly traded stock in that this will be a wholly owned subsidiary eventually and the case is still playing out.  As best I can tell, the initial thoughts that criminal charges would reach the CEO and ownership are not going to play out.  Perhaps WEB knows enough to say for sure.  But that was the biggest surprise from my perspective - this could end up with BRK buying into a private business where it needs promptly to replace management and that I didn't see that discussed by analysts.  And it could be that the risk is priced into the deal, but until we know pricing for the deal, I don't know what to make of that.

Haslam sounds complicit to me, listening to today's summary from the Knoxville News Sentinel reporter:
https://www.yahoo.com/sports/jury-fraud-case-hears-jimmy-183908147.html  (follow the video update link)

John Hjorth

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Re: Berkshire acquisition of Pilot Flying J - long term 80 per cent
« Reply #12 on: February 25, 2018, 02:22:43 PM »
Today I have tried to find some information about this acquisition in the 2017 Annual Report, outside the Shareholder Letter. Not much that I've found so far - perhaps something has skipped my attention here outside the Shareholder Letter.

Page K-99: The contractual obligation to buy [80 minus 38.6] percent at a later moment. It's mentioned that the annual sales is about USD 20 B.

I discussed earlier in this topic with rb how the accounting treatment of this investment would go. If one study the minority interest in the specication of the equity movements during 2017,  it can be observed, that there are no material additions to minority interests related to acquisitions. So I conclude, that this investment must be contained in "Other assets" under "Insurance and Other" [With no note to that post in the balance sheet], most likely accounted for under use of the equity method [to the opposite of line-by-line consolidation under the use of the past equity method].

- - - o 0 o - - -

Somehow I find it a bit funny that buying 38.6 percent of a company with a turnover of USD 20 B now simply drowns in the Berkshire numbers. [Again, something may have skipped my attention.]
« Last Edit: February 25, 2018, 02:46:05 PM by John Hjorth »
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Dynamic

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Re: Berkshire acquisition of Pilot Flying J - long term 80 per cent
« Reply #13 on: March 20, 2018, 03:48:13 AM »
$2.76 bn was paid for 38.6% of Pilot Travel Centers LLC according to this article on Yahoo Finance via Bloomberg

Spekulatius

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Re: Berkshire acquisition of Pilot Flying J - long term 80 per cent
« Reply #14 on: March 20, 2018, 06:08:54 AM »
Its a low margin business , so the valuation is fairly low despite the 20B  in revenue. A couple billion are small fries for BRK nowadays.
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globalfinancepartners

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Re: Berkshire acquisition of Pilot Flying J - long term 80 per cent
« Reply #15 on: March 20, 2018, 06:45:46 AM »
That's in the ballpark of what I was assuming.  Pretty reasonable if you assume they are making somewhere around $500 million each year, 14-15x earnings for the first chunk.  Implied market cap will probably be higher for the next shares that Berkshire buys, likely based on some pre-established formula based on earnings like the Marmon deal.  If they had auctioned or shopped the entire thing with a banker it would have gone for more



October 03, 2017, 06:19:03 AM
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Could be $8 Billion valuation for the whole thing.  Not sure.  Sales will be much higher than market cap for a company in that business.  It probably makes at least $500 million net each year, but I don't have a source for accurate numbers.

October 03, 2017, 06:06:25 AM
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It may be 5 or 6 Billion dollars for the entire company.  38% could be $2.25 Billion, the eventual 80% $5 Billion or so.  With few other acquisitions this quarter and what I assume to be a quick closing with Byron as the investment banker and one of the sellers, we will probably find out what Berkshire paid in the annual report cash flow statement.