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Nissan to take 34% stake in Mitsubishi Motors | Nissan to take 34% stake in Mitsubishi Motors |
(about 17 hours later) | |
Japanese carmaker Nissan will take a 34% stake in rival Mitsubishi Motors, in the wake of the latter's recent scandal over fuel efficiency. | Japanese carmaker Nissan will take a 34% stake in rival Mitsubishi Motors, in the wake of the latter's recent scandal over fuel efficiency. |
The deal is valued at 237bn yen ($2.2bn; £1.52bn). | |
Carlos Ghosn, chief executive of Nissan, has called the deal "a breakthrough transaction and a win-win" for both companies. | Carlos Ghosn, chief executive of Nissan, has called the deal "a breakthrough transaction and a win-win" for both companies. |
The tie-up is subject to regulatory approval as well as the backing of Mitsubishi shareholders. | The tie-up is subject to regulatory approval as well as the backing of Mitsubishi shareholders. |
If it is approved, the deal is expected to close by the end of the year and make Nissan the largest shareholder in Mitsubishi Motors. | If it is approved, the deal is expected to close by the end of the year and make Nissan the largest shareholder in Mitsubishi Motors. |
The strategic alliance will extend an existing partnership between the two companies forged over the past five years. | The strategic alliance will extend an existing partnership between the two companies forged over the past five years. |
Both will co-operate in areas including purchasing, technology and sharing platforms. | Both will co-operate in areas including purchasing, technology and sharing platforms. |
Mr Ghosn said: "We will support Mitsubishi Motors as they address their challenges and welcome them as the newest member of our enlarged alliance family." | Mr Ghosn said: "We will support Mitsubishi Motors as they address their challenges and welcome them as the newest member of our enlarged alliance family." |
Nissan's Alliance family is built around a 17-year cross shareholding agreement with French carmaker Renault. Nissan has also previously acquired stakes or signed partnerships with other carmakers including Daimler. | Nissan's Alliance family is built around a 17-year cross shareholding agreement with French carmaker Renault. Nissan has also previously acquired stakes or signed partnerships with other carmakers including Daimler. |
Osamu Masuko, chief executive at Mitsubishi Motors, said he hoped the deal with Nissan would restore confidence in the company: "It is not an easy task to regain trust, so through the alliance with Nissan, we will be starting a path towards tackling this difficult task." | Osamu Masuko, chief executive at Mitsubishi Motors, said he hoped the deal with Nissan would restore confidence in the company: "It is not an easy task to regain trust, so through the alliance with Nissan, we will be starting a path towards tackling this difficult task." |
Analysis: Theo Leggett, Business correspondent | Analysis: Theo Leggett, Business correspondent |
Mitsubishi - a relatively small player in the car industry - has found itself at the centre of a major scandal. A deal with Nissan will give it a financial bulwark to help it weather the storm. It will also gain access to Nissan's technology and its research and development programmes. That may prove invaluable in the longer term. | Mitsubishi - a relatively small player in the car industry - has found itself at the centre of a major scandal. A deal with Nissan will give it a financial bulwark to help it weather the storm. It will also gain access to Nissan's technology and its research and development programmes. That may prove invaluable in the longer term. |
Meanwhile, Nissan will pick up a substantial stake in Mitsubishi at a very attractive price. The company will gain access to Mitsubishi's sales network across South East Asia, in areas such as Malaysia, Thailand and Indonesia - a region that is very attractive to Japanese manufacturers. | Meanwhile, Nissan will pick up a substantial stake in Mitsubishi at a very attractive price. The company will gain access to Mitsubishi's sales network across South East Asia, in areas such as Malaysia, Thailand and Indonesia - a region that is very attractive to Japanese manufacturers. |
And let's not forget the bigger picture. Nissan is in a long-term alliance with Renault, which has a 43% stake in its partner. It looks as though Mitsubishi will now become a de-facto member of this Renault-dominated grouping. Together, they will build about 9.5 million cars a year - putting them on a par with the giants of the industry, such as Toyota and General Motors. | And let's not forget the bigger picture. Nissan is in a long-term alliance with Renault, which has a 43% stake in its partner. It looks as though Mitsubishi will now become a de-facto member of this Renault-dominated grouping. Together, they will build about 9.5 million cars a year - putting them on a par with the giants of the industry, such as Toyota and General Motors. |
Profits rise | Profits rise |
The tie-up was announced as Nissan reported a 14.5% rise in net profit to 523.8bn yen ($4.4bn; £4bn) for the 12 months to March. | The tie-up was announced as Nissan reported a 14.5% rise in net profit to 523.8bn yen ($4.4bn; £4bn) for the 12 months to March. |
The Japanese firm said rising demand in North America and China helped to offset unfavourable currency movements and weakness in emerging markets. | The Japanese firm said rising demand in North America and China helped to offset unfavourable currency movements and weakness in emerging markets. |
For the financial year to March 2017, Nissan is estimating flat profit growth and an 11% fall in operating profit due to the strengthening yen. | For the financial year to March 2017, Nissan is estimating flat profit growth and an 11% fall in operating profit due to the strengthening yen. |
Mr Ghosn said: "Encouraging demand for new models, combined with continued cost efficiency, helped us withstand currency headwinds and volatile trading conditions in several emerging markets." | Mr Ghosn said: "Encouraging demand for new models, combined with continued cost efficiency, helped us withstand currency headwinds and volatile trading conditions in several emerging markets." |
Nissan said recently launched models including the Maxima, Altima and Titan pick-up trucks were expected to contribute to global sales growth in the coming year. | Nissan said recently launched models including the Maxima, Altima and Titan pick-up trucks were expected to contribute to global sales growth in the coming year. |
Globally, Nissan sold 5.42 million vehicles in the 12 months to March - up 2% from the previous year. | Globally, Nissan sold 5.42 million vehicles in the 12 months to March - up 2% from the previous year. |
Yen effect | Yen effect |
Earlier this week Nissan's rival Toyota announced a record profit of 2.31tn yen. But the world's biggest-selling motor company then warned of a 35% fall in net profit for the year to March 2017 on the recent rise in the yen. | Earlier this week Nissan's rival Toyota announced a record profit of 2.31tn yen. But the world's biggest-selling motor company then warned of a 35% fall in net profit for the year to March 2017 on the recent rise in the yen. |
Last year, $1 would buy 120 yen, but over the next year that is expected to fall to just 105 yen. | Last year, $1 would buy 120 yen, but over the next year that is expected to fall to just 105 yen. |
A weaker yen makes goods manufactured by Japanese exporters less expensive overseas. | A weaker yen makes goods manufactured by Japanese exporters less expensive overseas. |