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Nissan moves to take major stake in Mitsubishi

Published: 12 May 2016

► Nissan to take 34% stake in Mitsubishi
► Move aimed at protecting Nissan
► Ghosn says it’s a ‘win-win’ situation

Nissan’s chief executive Carlos Ghosn has announced the firm is to take a 34% stake in Mitsubishi Motors Corporation (MMC) for 237 billion yen (£1.5 billion). Nissan will become the largest shareholder of MMC on closing the deal.

In the wake of Mitsubishi’s admission four weeks ago that it has falsified the economy of its minicars in Japan for as long as 25 years, the company’s value has dropped by 40%.

Nissan has a major interest in the issue, because Mitsubishi has made Nissan’s minicars since 2010. As a result of the scandal, sales of Nissan cars fell 22 percent in Japan last month – steeper than the 15 percent slump suffered by Mitsubishi.

Ghosn said: ‘This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors.’

Why is Nissan doing this?

The move looks as much to protect Nissan’s position and take more operational control of one of its suppliers, run by a long-standing and traditionally structured management, than any corporate largesse. Ghosn did something similar when he took on Nissan’s Japanese management in the 1990s.

Osamu Masuko, chairman of the board and chief executive of MMC, added: ‘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.’

Any updates on the Mitsubishi’s economy testing scandal?

Mitsubishi admitted this week that the economy test rigging might extend to all its cars sold in Japan. However, it has stated that the scandal relates only to cars sold in its home market.

Read more about the Mitsubishi efficiency scandal here

By Steve Moody

Contributing editor, adventurer, ideas pitcher, failed grower-upper

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