From rumor to reality in less than 24 hours. Nissan has announced just a few minutes ago it will acquire a 34-percent stake in Mitsubishi Motors for 237 billion yen (about $2.17B).

Japan's national public broadcasting organization, NHK, reported just yesterday that Nissan could acquire a 34-percent stake in Mitsubishi Motors and now we have official confirmation from the two car manufacturers. As part of the agreement, Nissan is buying 506.6 million shares in Mitsubishi Motors Corporation for 468.52 yen ($4.3) per share for a total of 237B yen ($2.17B). As a consequence, Nissan will become the biggest shareholder of MMC and will effectively take control of the troubled manufacturer.

Why troubled? Because Mitsubishi is involved in a major scandal concerning faked fuel economy tests, but now with Nissan acting as the single-largest shareholder, Mitsu has more chances of bouncing back. The scandal has greatly affected MMC’s stock prices (down by 43% since April 19), so Nissan probably managed to ink a pretty sweet deal.

Carlos Ghosn, chief executive and president of Nissan, described the transaction as a “win-win” situation and promised to “preserve and nourish” the Mitsubishi marque. His sentiments were echoed by Osamu Masuko, chairman of the board and chief executive of MMC: “This agreement will create long-term value needed for our two companies to progress towards the future.”

The new deal between the two comes as an extension of a partnership signed back in 2010 for a joint minicar venture. As part of the new agreement, Ghosn said that Nissan and Mitsubishi Motors could share R&D work for electric vehicles, pickups, and autonomous cars.

Source: Mitsubishi, Nissan

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Nissan and Mitsubishi Motors forge strategic alliance; Nissan to take 34% stake in Mitsubishi Motors for 237 billion yen

YOKOHAMA and TOKYO, Japan – Nissan Motor Co., Ltd., (“Nissan”), and Mitsubishi Motors Corporation, (“MMC”) announced that they have signed a Basic Agreement today to form a far-reaching strategic alliance between the two Japanese automakers.

Following an MMC share issue, Nissan will take a 34 percent equity stake in MMC for 237 billion yen.

The strategic alliance will extend an existing partnership between Nissan and MMC, under which the two companies have jointly collaborated for the past five years.

Nissan and MMC have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets.

Carlos Ghosn, chief executive and president of Nissan, said: “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.”

Osamu Masuko, chairman of the board and chief executive of MMC, said: “Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximizing the benefits from alliance partnerships. 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.”

Under the terms of the transaction, Nissan will purchase 506.6 million newly issued MMC shares at a price of 468.52 yen per share. The price per share reflects the volume weighted average price over the period between April 21, 2016 and including May 11, 2016. Nissan will become the largest shareholder of MMC on closing.

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.

The transaction is subject to the signing of a definitive Alliance Agreement, expected by the end of May 2016, the signing of a shareholders agreement with the current Mitsubishi Group shareholders of MMC and regulatory approvals. It is expected to close by the end of the year.

The decision by Nissan to acquire a strategic stake in MMC marks the latest expansion of its Alliance model, built around a 17-year cross shareholding arrangement with Renault. Nissan has also acquired stakes or signed partnerships with other automotive groups including Daimler, and AvtoVaz.

On closing, MMC will propose Nissan nominees as board directors in proportion to Nissan’s voting rights, including a Nissan nominee to become Chairman of the Board.