Nissan Mitsubishi

And, it’s pretty much a done deal – Nissan and Mitsubishi Motors Corporation (MMC) have announced that they have signed a basic agreement today for Nissan to take a 34% equity stake in MMC for 237 billion yen (RM8.37 billion). It had been reported earlier today that both companies were in advanced discussions over the matter.

The transaction is subject to the signing of a definitive Alliance Agreement, expected by the end of May, and the signing of a shareholders agreement with the current Mitsubishi Group shareholders of MMC as well as the usual regulatory approvals. The deal is expected to be concluded by the end of the year.

Under the terms of the transaction, Nissan will purchase 506.6 million newly-issued MMC shares at a price of 468.52 yen per share, and the deal will see Nissan effectively becoming the largest shareholder of MMC once it is completed. The automakers expect Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo-Mitsubishi UFJ to maintain a significant collective ownership stake in MMC and to support the strategic alliance.

The statement issued by the automakers also stated that MMC will propose Nissan nominees as board directors in proportion to Nissan’s voting rights, as well as a Nissan nominee to become chairman of the board.

Beleaguered MMC is struggling in the wake of a deepening fuel economy scandal. Last month, the company revealed that it had been using methods not compliant with Japanese standards to test for fuel economy since 2002. The cars that brought the issue to the forefront were the Mitsubishi eK Wagon and eK Space as well as the Nissan Dayz and Dayz Roox, which MMC has been manufacturing and supplying to Nissan since June 2013.