M&A News: Berkshire Hathway-Backed Mitsubishi Snaps Up U.S. Shale Business Aethon for $7.5B

Berkshire Hathaway ($BRK.B)-backed Mitsubishi has bought U.S. shale-gas business Aethon in a $7.5 billion deal.

Shale Gas Deal

The Japanese trading house, in which Berkshire Hathaway holds an around 10% stake, said that it had agreed to acquire Aethon III, Aethon United and related entities that own shale-gas interests and gas processing facilities, and also develop, produce and sell natural gas.

Mitsubishi said the deal marked its entry into the U.S. shale gas business across the value chain, from upstream ownership through domestic sales and export of produced gas.
The acquisition is expected to close in the first quarter of Japan’s fiscal year, which is between April and June this year. The deal includes $5.2 billion in equity purchases and taking on $2.33 billion in Aethon’s debt.

Aethon’s shale gas assets are primarily located in the Haynesville Shale formation, spanning Texas and Louisiana, and currently produce about 15 million tons per year of liquefied natural gas (LNG).

Mitsubishi said that Haynesville is a major supply source of natural gas for the growing southern U.S. market and offers favorable access to multiple LNG export terminals, including Cameron LNG, where MC holds liquefaction capacity rights under a tolling agreement.

European Export Potential

Aethon’s natural gas is currently sold in the U.S. southern market. Mitsubishi said that part of the production could be exported as liquefied natural gas to Asia, including Japan and Europe.

Mitsubishi is looking to capitalize on rising power needs from data centers, manufacturing, as well as LNG exports. There is also a strong geopolitical dimension to the deal. It comes as President Trump looks to beef up the U.S.’s manufacturing base and increase energy exports, while pressing allies not to buy oil and gas from countries such as Russia.

Mitsubishi’s deal follows that of Japan’s largest power generation company, JERA, which announced a $1.5 billion investment last October in the Haynesville Shale basin on the Louisiana-Texas border, as part of Tokyo’s $550 billion investment pledge to the U.S.

It also marks Berkshire Hathaway’s continued commitment to its stakes in Japanese trading houses such as Mitsubishi, Sumitomo (SSUMF) and Marubeni for the long-term.

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