Baku. 12 May. REPORT.AZ/ Nissan Motor Co is set to take a key stake in Mitsubishi Motors Corp, two sources familiar with the matter said, in a $1.8 billion deal that bails out its scandal-hit rival and boosts Nissan's clout in the small car market. Report informs citing the TASS.
One of the sources said Mitsubishi had approved the deal at a board meeting earlier in the day. Nissan's board was also due to meet on Thursday, a scheduled gathering before the company releases quarterly earnings.
Mitsubishi and Nissan, Japan's second-largest carmaker, already cooperate on development and manufacturing with a partnership dating back to 2011, but that deal does not currently involve any cross-shareholding.
Mitsubishi, however, is weathering its third major scandal in under two decades after admitting it overstated the fuel economy of at least four of its models - mini cars sold in Japan, including two sold under Nissan's badge.
That admission has badly hit Mitsubishi, wiping $3 billion off its value and bruising a brand already losing market share.
The two sides early on Thursday said they were discussing "various matters including capital cooperation" but gave no further detail. They later confirmed a joint press conference.
Sources familiar with the talks said Nissan could invest about $1.8 billion to buy roughly a third of Mitsubishi - potentially enough to wield control, under Japanese rules.
Nissan would become the largest single shareholder of much smaller Mitsubishi Motors, gaining a leg up in the domestic small car market - where it is dwarfed by Suzuki and Toyota's Daihatsu - and in key emerging economies.
"With little prospect of growth in the domestic car market, Nissan probably wants to get more involved in smaller vehicles given expectations of a surge in emerging markets and elsewhere," said Kiyoshi Yamanaka at T&D Asset Management.
"But taking a one-third stake feels a bit like a half-measure. The key will be how well Nissan is able to exert control over Mitsubishi Motors' governance and repair its damaged brand value."
Mitsubishi Motors shares, down around 45 percent since it admitted misconduct over mileage on April 20, were untraded just before closing up 16 percent at the daily limit.