Nissan throws $2.2 bln lifeline to scandal-hit Mitsubishi Motors
AFP photoNissan threw a lifeline to Mitsubishi Motors on May 12 as it announced plans to buy a one-third stake in the scandal-hit automaker for $2.2 billion, forging an alliance that will challenge some of the world’s biggest auto groups.
The news comes after Mitsubishi was plunged into crisis following bombshell revelations that it has been cheating on fuel-economy tests for years - sparking questions about the company’s future.
Under the deal, Nissan will become the struggling firm’s top shareholder, vaulting past Mitsubishi Heavy Industries, which owns about 20 percent of the Outlander sport utility vehicle maker.
Nissan and French automaker Renault own share stakes in each other and their sales lumped together with those of the smaller Mitsubishi would top 9.5 million units annually - although they will operate as independent firms.
That is not far behind the 10.15 million sold last year by Toyota, the world’s top automaker, and 9.9 million shifted by German giant Volkswagen.
Chevrolet and Cadillac maker General Motors moved 9.8 million vehicles globally in 2015.
“This transaction represents a potential win-win for both of our companies and promises growth opportunities,” Nissan CEO Carlos Ghosn told reporters.
“We are determined to preserve and nurture the (Mitsubishi) brand. We will help this company to address the challenges it faces, particularly in restoring consumer trust.”
However, both firms - which have longstanding business links -- would remain independent of each other, Ghosn added.
“There is no confusion. Nissan is Nissan. Mitsubishi is Mitsubishi,” he said.
“Mitsubishi is responsible for its own market, for its own strategy. We are shareholders.”
In response to news of the deal, Mitsubishi shares skyrocketed more than 16 percent to 575 yen in Tokyo.
The stock had plunged about 40 percent since the scandal broke last month.
The deal announced on May 12 will see Nissan buy about 506 million Mitsubishi shares at 468.52 yen apiece, valuing the purchase at 237.36 billion yen ($2.2 billion), according to a regulatory filing.
Nissan will also be allowed to appoint some members to Mitsubishi’s board.