Nissan Motor Co and Mitsubishi Motors Corp (MMC) today announced the signing of a Basic Agreement following which, Nissan will purchase a 34% equity stake in the latter for 237 billion yen (Rs 14,490 crore).

Following a troubled period in Mitsubishi's history, the deal will make Nissan the largest single shareholder in Mitsubishi, in the process acquiring the controlling stake in the alliance.

The alliance will extend an existing partnership between Nissan and the scandal-hit Mitsubishi, under which the two companies have jointly collaborated for the past five years. The current agreement is set to be signed by the end of May.

Both the Japanese carmakers have agreed to cooperate in areas like purchasing, common vehicle platforms, technology-sharing, joint plant utilisation 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 (Rs 287) 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.

Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo – Mitsubishi UFJ are expected to maintain a significant collective ownership stake in Mitsubishi Motors.

Apart from the strategic stake in MMC, 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.

Also read:

- ‘Only Japanese cars cheated fuel economy tests,’ says Mitsubishi

- Nissan reports net income of 523.8 billion yen (+14.5%) for FY2015-16

- Nissan plots low cost, low spec EV for emerging markets