Japan Nissan Motor has agreed to take a 34 percent stake in Mitsubishi Motors Corp, taking de facto control with a $2.2 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 cooperate on development and manufacturing with a partnership dating back to 2011, but that deal does 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 percent discount to Wednesday’s close, raising 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.
Nissan Chief Executive Carlos Ghosn said the two would now share and jointly develop technology, and could realize “billions” in synergies by coordinating purchasing, plant utilization 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 told reporters at a joint press conference in Yokohama, south of Tokyo.
Full Content: Business Insider
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