Mitsubishi Motors Corporation
(MMC) has announced that Nissan Motor Co., Ltd. has become its largest
shareholder after completing the purchase of 34% of MMC-issued stock for 237
billion JPY (approx US $ 2.28 billion)
As part of Nissan's strategic investment, MMC
will become a full member of the 17-year strong global alliance between Nissan
and Renault – paving the way for synergies to enhance profit margins and
earnings per share.
Nissan Chairman and Chief Executive
Officer Carlos Ghosn has been nominated to become chairman of the Board. Ghosn
will be joined by three other Nissan nominated directors, including Mitsuhiko
Yamashita, Nissan's former executive vice president of research and
development, who joined MMC earlier this year as head of development. The other
nominees are Hitoshi Kawaguchi, Nissan chief sustainability officer and head of
global external affairs, and Hiroshi Karube, Nissan global controller and
global asset manager.
MMC President and Chief
Executive Officer Osamu Masuko requested that Nissan also provide a senior
executive to join the company's executive committee to bolster MMC's
management. Trevor Mann, currently Chief Performance Officer of Nissan, will
become Chief Operating Officer of MMC.
"I welcome Nissan's
willingness to provide strategic, operational and management support as our new
lead shareholder," said Masuko. "As part of our Board and management
team, Nissan will help us to rebuild customer trust in our company and maximize
potential future synergies through our deeper alliance."
MMC will appoint a new role of
director for global risk control to report directly to the chief executive
officer, who will oversee compliance and risk control. This director will
regularly report to the board on moves to enhance governance at MMC.
The three largest institutional shareholders
in MMC – Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of
Tokyo-Mitsubishi UFJ – have welcomed Nissan's investment and pledged their
support for its board nominees. Moving forward, these three Mitsubishi
institutional shareholders together with Nissan will maintain a more than 51
percent of the share capital.
Nissan and MMC will begin cooperating on a
wide-ranging synergy program, building on a five-year alliance in minicars
between the two companies.
The two companies have identified a number of
valuable synergies in areas including:
- Joint purchasing
- Deeper localization in
operations around the world
- Joint plant utilization
- Common vehicle platforms
- Technology sharing
- Cooperation in emerging and
developed markets; and
- The use of the Nissan Sales
Finance Company to serve MMC customers in any market where mutually beneficial.
The partnership is expected to generate significant
recurring synergies for MMC, equivalent to a 1 percentage point increase in
operating profit margin in fiscal year 2017, 2 percentage points in fiscal year
2018, and more than 2 percentage points in fiscal year 2019. The projected
synergies are also forecasted to enhance MMC earnings per share in fiscal year
2017 by 12 yen per share, and by 20 yen per share in fiscal year 2018.
Ghosn said: "The expanded Alliance will
be one of the largest automotive groups in the world, with annual sales of 10
million units in fiscal year 2016. The addition of Mitsubishi Motors will build
on the entrepreneurial spirit and management cooperation that has characterized
our alliance with Renault for 17 years. I am confident this will benefit all