Nissan to buy 34% Mitsubishi stake

YOKOHAMA, Japan: Nissan has agreed to take a 34 percent stake in Mitsubishi Motors Corp, taking de facto control with a $2.2 billion (R33 billion) bet that bails out its smaller, scandal-hit rival.

The deal is a lifeline for Mitsubishi Motors, which is mired in its third scandal in two decades, but should also be a boost for Nissan. Japan’s number two car maker has struggled to make inroads into Asia outside China, in countries like Thailand and the Philippines, where Mitsubishi’s models are popular.

Mitsubishi and Nissan already co-operate on development and manufacturing, with a partnership dating back to 2011, but that deal does not currently involve any cross-shareholding.

Under yesterday’s deal, which both companies said will help Mitsubishi “regain trust”, Mitsubishi Motors will issue new shares to Nissan at a 5.3 percent discount to Wednesday’s close, raising 237.4 billion yen (R32.51 billion).

That will hand Nissan just over a third of the group – enough to wield control under Japanese shareholding rules.

Nissan chief executive Carlos Ghosn said the two would now share and jointly develop technology, and could realise “billions” in synergies by co-ordinating purchasing, plant utilisation and cooperating in growth markets.

“We believe we can help and support and grow together, better than if Mitsubishi was doing this on its own,” he told reporters at a joint press conference in Yokohama, south of Tokyo.

Mitsubishi admitted last month to overstating the fuel economy of at least four of its models, which badly hit the company, wiping $3bn off its value and bruising a brand already losing market share, as investors fretted over potential compensation costs. – Reuters