Japanese carmaker Nissan Motor will acquire a 34-per-cent stake in embattled Mitsubishi Motors for 237 billion yen (2.2 billion dollars), the two companies said Thursday.
Under the deal, Nissan will become the largest shareholder in its rival, overtaking the 12.6 per cent currently held by Mitsubishi Heavy Industries.
"We will be the largest shareholder of MMC (Mitsubishi Motors), respecting their brand, their history and boosting their growth prospects,” Nissan chief executive and president Carlos Ghosn said in a statement.
“We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family," he added.
Nissan wants to take advantage of Mitsubishi Motors’ popularity in South-East Asia in order to boost its group sales.
Japanese media reported earlier in the day Nissan would spend more than 200 billion yen to purchase more than 30 per cent of Mitsubishi Motors.
Shares in Mitsubishi Motors soared on the Tokyo Stock Exchange on the news before the announcement. Its shares were up 16.16 per cent from the previous day’s closing price.
The announcement came one day after Mitsubishi Motors said its fuel-efficiency cheating involved more models than the four minicars listed in previous statements.
Mitsubishi Motors acknowledged last month it had falsified data on fuel economy tests since 1991 for the four models, including Dayz and Dayz Roox mini vehicles produced for Nissan, to present better fuel consumption rates than the actual rates.
Mitsubishi Motors saw its sales of minicars tumble 44.7 per cent from a year earlier to 1,477 vehicles in April, according to the Japan Light Motor Vehicle and Motorcycle Association.
Sales of Nissan’s minicars dived 51.2 per cent to 5,574 units as some of its vehicles are manufactured by Mitsubishi, the association said.
Minicars or mini vehicles have engines with a capacity no larger than 660 cubic centimetres.
Meanwhile, Nissan predicts an operating profit of 710 billion yen for the current financial year due to a rising yen, down 10.5 per cent from the previous year, the company said Thursday.
“We have adopted a cautious outlook for the current fiscal year given continuing market and exchange rate volatility,” Ghosn said.
Nissan expects a net profit of 525 billion yen for the year through March 2017, up 0.2 per cent from the previous year, while sales are predicted to fall 3.2 per cent to 11.8 trillion yen.
Nissan also said its operating profit for the previous financial year jumped 34.6 per cent from a year earlier to 793.3 billion yen due to growing demand for new products in North America, Western Europe and China.
The carmaker posted a net profit of 862.3 billion yen for the year ending March 31, up 24.2 per cent from the year before while sales grew 7.2 per cent to 12.2 trillion yen for the year.
For the January-to-March period, Nissan booked an operating profit of 205.7 billion yen, up 19.9 per cent from the same period last year, while the carmaker said its net profit for the quarter fell 40 per cent from a year earlier to 71 billion yen. Sales edged down 1.2 per cent to 3.25 trillion yen.