Nissan Motor Co., Ltd. and
Mitsubishi Motors Corporation, (MMC) have announced that they have signed a
Basic Agreement to form a far-reaching strategic alliance between the two Japanese
automakers. Following an MMC share issue, Nissan will take a 34pc equity stake
in MMC for 237 billion yen (Rs 14,459 crore approximately).
The transaction is subject to
the signing of a definitive Alliance Agreement, expected by the end of May, 2016,
the signing of a shareholders agreement with the current Mitsubishi Group
shareholders of MMC and regulatory approvals. It is expected to close by the
end of the year.
The decision by Nissan to
acquire a strategic stake in MMC marks the latest expansion of its Alliance
model, built around a 17-year cross shareholding arrangement with Renault.
Nissan has also acquired stakes or signed partnerships with other automotive
groups including Daimler, and AvtoVaz.
(In India, though Nissan and Renault function as two different
companies, they have a common plant in Chennai in the South Indian State of
Tamil Nadu, under the Renault Nissan Alliance. Mitsubishi Motors, on the other
hand does not have its own plant in India as it assembles its vehicles in the Hindustan
Motors plant in Thiruvallur in Tamil Nadu. Post this equity control by Nissan
in Mitsubishi, operations in India too may have a positive impact for all
The strategic alliance will
extend an existing partnership between Nissan and MMC, under which the two
companies have jointly collaborated for the past five years. Nissan and MMC
have agreed to cooperate in areas including 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
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 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.
MMC and Nissan expect 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.
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.
Source: Mitsubishi Motors / Motown India
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