REUTERS/THOMAS PETERNissan Motor Co 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.
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Leaders of the two automakers appeared at a last-minute press conference Thursday in Yokohama, Japan – home of the Nissan headquarters – to announce what Nissan CEO Carlos Ghosn called a “win-win” deal.
If the deal proceeds according to plan, Nissan, a Renault S.A. affiliate, will become the largest shareholder in Mitsubishi Motors and surpass Mitsubishi Heavy Industries Ltd.
Mitsubishi Corp.MSBHY 0.24 % holds a 10% stake, while the Bank of Tokyo-Mitsubishi UFJ, owned by Mitsubishi UFJ Financial Group Inc.,MTU -1.70 % holds about a 4% stake.
“Internal hearings suggest that running resistance was improperly calculated in nine other models now sold in Japan, as well as in other models no longer sold in Japan”, Mitsubishi said in a statement.
The development comes as Mitsubishi grapples with declining sales and growing costs after admitting in April to overstating fuel economy for certain models sold in Japan.
It (Other OTC: ITGL – news) was Nissan that first uncovered the problems with Mitsubishi’s fuel economy data, but Mitsubishi has said it had no part in the cheating. The company should be able to handle compensation with its own resources, he said.
Mitsubishi shares have fallen 43% since it admitted rigging the fuel economy on four minicars, two of which it made for Nissan.
Both companies said they are in talks about a possible capital tie-up and that their boards would meet separately Thursday to discuss the matter. “We are shareholders.” In response to news of the deal, Mitsubishi shares skyrocketed more than 16 per cent to 575 yen in Tokyo.
Mr Masuko apologised for the scandal but welcomed the alliance with Nissan.
In the wake of the scandal shares in Mitsubishi dropped more than 40 per cent. Nissan nominees will join the board at Mitsubishi Motors, including the chairman of the board.
In addition to United Kingdom cars not being affected, Mitsubishi revealed that cars sold elsewhere in the world – with the exception of Japan – were also not embroiled in the fuel economy scandal. Chevrolet and Cadillac maker General Motors moved 9.8 million vehicles globally in 2015.
For the RVR SUV, Mitsubishi Motors had calculated the fuel economy using data from a base model, without conducting any actual testing, the company said.
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Nissan wants to take advantage of Mitsubishi Motors’ competitive edge in sales in Southeast Asia to increase its group power, the sources said.
