Mitsubishi Corp. is in advanced talks to buy the assets of Aethon Energy Management for close to $8 billion, people familiar with the matter said, in what would be the Japanese conglomerate’s biggest ever acquisition.
Tokyo-based Mitsubishi could announce a deal with the US energy-focused investment firm in the next couple of months, according to the people. Abu Dhabi National Oil Co. had also been considering a potential transaction involving Aethon, Bloomberg News reported in April.
A deal would likely be structured as a purchase of Aethon’s portfolio, which includes natural gas production operations and midstream assets, some of the people said. While a deal is close, talks could still be delayed or falter, they said, asking not to be identified discussing confidential information. It’s also possible another bidder could emerge for Aethon, they added.
A representative for Aethon declined to comment, while a spokesperson for Adnoc didn’t respond to requests for comment. Mitsubishi said in a statement that no decision has been made regarding Aethon.
Dallas-based Aethon is among the most active drillers in the Haynesville shale basin that straddles East Texas and northern Louisiana. Aethon is close to several LNG export terminals along the Gulf Coast.
Mitsubishi, one of Japan’s major trading companies, is a key supplier of liquefied natural gas and has a stake in a US export facility in Louisiana. Japan’s government sees the artificial intelligence boom potentially lifting power demand over the next decade, and has urged the nation’s private firms to invest in gas.
The talks mean that Mitsubishi is looking to double down on one of its most profitable business segments: natural gas. Japan’s trading houses, which include Warren Buffett’s Berkshire Hathaway Inc. as an investor, have outperformed the market over the last few years due in part to strong profits from overseas gas and LNG projects.
“Given the shortage of power due to AI demand, everything related to energy is generally positive,” said Shuji Hosoi, senior strategist at Daiwa Securities Co. “That said, there are worries about whether it may be overpaying for the purchase,” like the steep premium Nippon Steel Corp. has agreed to pay for United States Steel Corp.
While global demand for LNG is expected to rise, there is also a risk that business performance will be affected by turbulent market conditions, said Norikazu Shimizu, an analyst at IwaiCosmo Securities Co. Investors may find it difficult to make a judgment call, and many are likely waiting for more concrete information, he said.
An acquisition of Aethon would be the largest on record by Mitsubishi, Bloomberg-compiled data show, topping its purchase of a stake in a unit of Anglo American Plc for almost $5.4 billion in 2011.
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