Nissan buying $2.2 billion controlling stake in scandal-hit Mitsubishi Motors

Thu May 12, 2016 7:33am EDT
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By Maki Shiraki and Naomi Tajitsu

YOKOHAMA, Japan (Reuters) - Nissan Motor Co has agreed to buy 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 and has had $3 billion wiped off its market value after confessing to manipulating fuel economy data.

But it should also be a boost for Nissan. Japan's second-largest car maker has struggled to make inroads into Southeast Asia, 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, 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 are determined to preserve and nurture the Mitsubishi Motors brand. We will help this company address the challenges it faces, particularly in restoring consumer trust in its fuel economy performance," Ghosn said, addressing a joint press conference in Yokohama, south of Tokyo.   Continued...

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, speaks during a news conference in Yokohama, Japan, May 12, 2016. REUTERS/Thomas Peter