Japanese car-maker Nissan Motor Co Ltd has announced strategic alliance with Mitsubishi Motors Corporation (MMC), according to a statement on Nissan's official website. As per the alliance, Nissan will take a 34 percent equity stake in Mitsubishi for Â¥237 billion ($2.2 billion).
Nissan will purchase 506.6 million newly issued Mitsubishi shares at a price of Â¥468.52 per share. The share price is the volume weighted average price over the period between April 21, 2016 and including May 11, 2016. The deal is subject to the signing of an Alliance Agreement, expected by the end of this month. Nissan will become the largest shareholder of Mitsubishi Motors when the transaction is completed.
The strategic alliance is expected to further strengthen the existing five-year-old partnership between Nissan and Mitsubishi. Both companies would cooperate in areas such as purchasing, common vehicle platforms, technology-sharing, joint plant utilisation and growth markets, said the statement.
"This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects. We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family," said Carlos Ghosn, chief executive and president of Nissan, in the statment.
The entry of Nissan comes after Mitsubishi in April admitted it had cheated on fuel efficiency tests to show better fuel consumption rates in over 600,000 vehicles. Mitsubishi admitted that the misconduct involved four mini-car models â€” "eK Wagon" and "eK Space" manufactured and sold by MMC, and "Dayz" and "Dayz Roox," manufactured by MMC for Nissan.
Acquiring a strategic stake in Mitsubishi marks the latest expansion of Nissan's alliance model, which started with a shareholding arrangement with Renault 17 years ago. Nissan has also acquired stakes or signed partnerships with automotive companies such as Daimler and AvtoVaz.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]