Nissan, Mitsubishi forge alliance; Nissan gets 34% stake in Mitsubishi

(May 12, 2016) YOKOHAMA and TOKYO, Japan — Nissan and Mitsubishi announced today that they have signed a basic agreement to form a far-reaching strategic alliance between the two Japanese automakers.

Following an Mitsubishi share issue, Nissan will take a 34 percent equity stake in Mitsubishi for 237 billion yen ($2.2 billion).

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

The purchase is poised to vault Nissan past Mitsubishi group companies to become Mitsubishi Motors’ single-largest shareholder.

The companies today said they plan to sign an agreement by May 25 in which Nissan can name four directors to Mitsubishi Motors’ board. A Nissan-appointed director can also be named chairman of Mitsubishi Motors, according to a filing today. The deal will be invalid if not completed within a year.

Nissan and Mitsubishi 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 sizable synergies. We will be the largest shareholder of Mitsubishi, respecting their brand, their history and boosting their growth prospects. We will support Mitsubishi 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 Mitsubishi, 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 Mitsubishi 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 and including May 11.