Today Mitsubishi and Nissan agreed to a 237 billion yen ($2.2 million) deal intended to help Mitsubishi out of a current scandal and beyond to revitalization.
The agreement settled today is subject to the signing of a definitive Alliance Agreement May 25. Assuming this goes through, Nissan’s 34-percent stake under Japanese law will see it in control ahead of existing stakeholders.
“MMC and Nissan expect Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo – Mitsubishi UFJ to maintain a significant collective ownership stake in Mitsubishi Motors, and to support the strategic alliance,” said the company today in a statement.
Nissan’s acquisition also marks the latest expansion of its Alliance model, built around a 17-year cross shareholding arrangement with Renault.
Turmoil began ironically when Nissan, a partner for the past half decade on Japan market minicars, revealed Mitsibishi had discrepancies in its actual and reported mpg.
When company engineers were collaborating, the issues were discovered which sent Mitsubishi into a tailspin with its market share price diminished by 43 percent since April.
In stepping in, Nissan may have saved Mitsubishi, but also saved itself nearly half the cost of what such a deal would have demanded prior.
But the companies have otherwise been edging toward closer relations, and what could have ended in a blow out ended – or began – essentially in a corporate marriage.
Nissan’s Carolos Ghosn – and analysts besides – are declaring the tie-up a win-win all around.
“This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. It creates a dynamic new force in the automotive industry that will cooperate intensively, and generate sizeable synergies. 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.”
Under the deal, Nissan and MMC have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets.
Osamu Masuko, chairman of the board and chief executive of MMC said the deal will help Mitsubishi revitalize its flagging brand image/
“Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximizing the benefits from alliance partnerships,” said Masuko. “This agreement will create long-term value needed for our two companies to progress towards the future. We will achieve long term value through deepening our strategic partnership including sharing resources such as development, as well as joint procurement.”