Nissan Motor has agreed to take a 34 per cent stake worth $2.2 billion in Mitsubishi Motors Corp., Nissan Chief Executive, Carlos Ghosn, said on Thursday.
Ghosn told reporters at a joint news conference in Yokohama, Japan that the stake gave Nissan de facto control in its smaller, scandal-hit rival, Mitsubishi Motors Corp.
He said the two would now share and jointly develop technology and could realise “billions” in synergies by coordinating purchasing, plant utilisation and cooperating in growth markets.
“We believe this will be a win-win situation. We believe we can help and support and grow together, better than if Mitsubishi was doing this on its own,” he said.
Ghosn said Nissan would be able to nominate a third of Mitsubishi Motors’ board, adding he believed that would also be led by a Nissan executive.
Ghosn said he had been “reassured” by Mitsubishi Motors’ Chief Executive, Osamu Masuko, over the size and scope of the fuel economy troubles, which Masuko said had accelerated discussions.
Mitsubishi admitted last month that it overstated the fuel economy of at least four of its models – mini cars sold in Japan, including two sold under Nissan’s badge.
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 cooperate on development and manufacturing with a partnership dating back to 2011, but that deal did not currently involve any cross-shareholding.
Under Thursday’s deal, which both companies said will help Mitsubishi “regain trust”, Mitsubishi Motors will issue new shares to Nissan at a 5.3 per cent discount to raise 237.4 billion yen ($2.18 billion).
That will hand Nissan just over a third of the group – enough to wield control, under Japanese shareholding rules.
That has badly hit Mitsubishi, wiping $3 billion off its value and bruising a brand already losing market share, as investors fretted over potential compensation costs.