Warren Buffett Acquires Pilot Flying J, Sees Potential in Truck Stops

October 04, 2017 by Dale Buss, @DaleDBuss

Pilot Flying J, the nation’s largest operator of truck stops, agreed to be acquired by Berkshire Hathaway Inc., which is controlled by legendary financier Warren Buffett.

The family-owned, Knoxville, Tenn.-based chain of 750 truck stops said that Berkshire has made an “significant minority investment” in Pilot Flying J that will lead to majority-shareholder status by 2023. By easing into control of Pilot Flying J – which has $20 billion in annual revenue and 27,000 employees – Buffett can tap into a robust retail category new to Berkshire Hathaway.

“Given the impeccable reputation of Warren Buffett’s Berkshire Hathaway and our shared vision and values, we decided that this was an ideal opportunity,” said Jimmy Haslam, chief executive of Pilot Flying J.

Jimmy Haslam Headshot

Jimmy Haslam. (Photo: Pilot Flying J)

Buffet credited Haslam and his team as an economic “enabler,” and said he looks forward to leveraging the partnership to support the trucking industry.

“The company has a smart growth strategy in place and we look forward to a partnership that supports the trucking industry for years to come,” Buffet said in a statement.

“The family wanted to make some kind of transition, and Buffett was a good way to do that,” said Gary Hall, president of Gary Hall Associates, a truck-stop consulting firm in Medford, Ore.

Flying J and its leaders “are visionaries in the industry,” Hall said.

Berkshire Hathaway will acquire a 38.6-percent equity stake in Pilot Flying J for a price the parties didn’t disclose. The Haslam family will continue to hold a majority interest with 50.1 percent ownership. FJ Management Inc., which is owned by the Maggelet family, will retain an 11.3 percent ownership until 2023. The Maggelet family owned Flying J when it was acquired by Pilot in 2010.

Berkshire will become majority shareholder by acquiring an additional 41.4-percent equity stake in 2023.  But the Haslam family will retain 20-percent ownership in the company. Pilot Flying J will remain headquartered in Knoxville.

The Haslam family members will stay on as active managers for the foreseeable future.  Jimmy Haslam, who also owns the Cleveland Browns of the National Football League, will continue as chief executive. His brother is Tennessee Gov. William Haslam. Their father, Jim, started the company in 1958.

Pilot Flying J paid a $92-million settlement to trucking customers after a 2013 raid by government agents led to conviction of several employees for shortchanging some customers on diesel rebates.

This is Berkshire Hathaway’s first major investment in any part of the trucking industry, though it has major holdings throughout the transportation sector, including auto dealerships, a railroad, a maker of aircraft parts. Auto insurer Geico is one of its best-known brands.

Pilot Flying J has strengthened its position as the biggest operator of travel centers in North America as the industry has consolidated. It has more than 70,000 parking spaces and 5,000 diesel lanes.

Pilot Flying J truck stop.

Pilot Flying J truck stop. (Photo: Pilot Flying J)

Other major players include TravelCenters of America and Love’s Travel Stops.

The truck stop industry “is doing very well because America wants their stuff delivered tomorrow,” Hall said. And trucks are a major cog in the thriving e-commerce market, he said.

Flying J and others also have turned their stops into roadside retail centers, adding mainstream restaurant brands and well-equipped shops. This has attracted car travelers in addition to truckers. Even residents from surrounding areas are customers, Hall said.

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One Response

  1. Thomas R. Harris C-000090

    As an appraiser who specializes in truck stops and fuel stations, I have worked with Gary Hall for many years. My policy requires Gary Hall’s consulting expertise whenever I accept a truck stop or fuel station appraisal file. He knows the truck stop industry better than anyone I have met, and I met him when he was managing a major truck stop in Medford Oregon. H gets an A+ rating from me, and our clients are very pleased with the combination.


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