Nissan and Mitsubishi confirm tie-in

NISSAN Motor Company and Mitsubishi Motors Corporation have officially announced that they have formed a “far-reaching strategic alliance” that will see Nissan take a majority share of the embattled Japanese car-maker.

The “basic agreement”, announcement in Japan yesterday, confirms that Nissan will take a 34 per cent share of MMC for ¥237 billion ($A2.9b).

In a joint statement, Nissan and Mitsubishi said they expect existing MMC shareholders 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”.

It remains unclear what impact, if any, the strategic alliance will have on the companies’ local arms, Nissan Motor Company Australia and Mitsubishi Motors Australia Limited.

The two companies have had been partners in developing Japanese-market mini cars for the past five years, a relationship that has come under recent scrutiny with the announcement by MMC last month that it had manipulated fuel economy figures for its joint-developed Mitsubishi and Nissan ‘kei’ cars.

According to the statement, Nissan and MMC have agreed to collaborate in a number of areas, including common vehicle platforms, technology sharing, purchasing, joint plant utilisation and growth markets.

It is unclear if the agreement will revive plans for Mitsubishi to share development of its small and mid-size passenger cars with Renault-Nissan Alliance that did not come to fruition a year ago.

Nissan is set to purchase 506.6 million newly-issued MMC shares for a price of ¥468.52 ($A5.89) per share. The companies state that this price reflects the volume weighted average price from April 21, 2016, to May 11, 2016.

The agreement will be formally recognised at the end of May with the signing of a definitive Alliance Agreement, as well as the signing of a shareholders agreement with Mitsubishi Group shareholders of MMC and regulatory approvals.

This is expected to close by the end of the year. MMC will then suggest Nissan nominees as board directors in proportion to Nissan’s voting rights, which will include a Nissan candidate to become chairman.

Nissan Motor Company chief executive and president Carlos Ghosn said the Mitsubishi brand would be protected under the agreement.

“This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors,” he said. “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.” MMC chairman of the board and chief executive Osamu Masuko said the deal would be mutually beneficial for both car-makers in the long term.

“Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximising the benefits from alliance partnerships,” he said. “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.” The addition of Mitsubishi will expand the Renault-Nissan Alliance further. The French-Japanese partners already own stakes in Russian car-maker AvtoVaz as well as German giant Daimler.

Brands already under the Alliance banner include Nissan, Renault, Dacia, Renault-Samsung Motors, Alpine, Datsun and Infiniti.