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Update: Nissan confirms talks for tie-up with Mitsubishi
[TOKYO] Nissan Motor confirmed Thursday it was in capital tie-up talks with scandal-hit Mitsubishi Motors, as media reports said the deal would effectively be an acquisition that would create a mega-automotive group.
The deal, if agreed, would create a firm that would rival global titans Toyota and Volkswagen in terms of sales volume, Japanese media said.
"Nissan and Mitsubishi are discussing various matters including capital cooperation, but nothing has been decided," Nissan said in a statement.
"We plan to discuss this matter and others at a regularly scheduled board of directors meeting today." In a separate statement, Mitsubishi Motors also said it would discuss the issue at its board meeting later Thursday.
The announcements fuelled buying interest in Mitsubishi shares at the Tokyo Stock Exchange, where early trading was yet to begin as buy orders overwhelmed sellers. The imbalance, however, suggested the stock price was set to surge 16 per cent when trading starts.
The announcements followed Japanese media reports that the two firms were in the final stages of negotiations for Nissan to buy a 34 per cent stake in scandal-hit Mitsubishi.
The deal, reported to be worth US$1.8 billion, would amount to Mitsubishi coming under the control of Nissan, making it the top shareholder ahead of Mitsubishi Heavy Industries which holds a 20 per cent stake, according to major media including national broadcaster NHK.
The combined global sales of the Renault-Nissan alliance and Mitsubishi Motors would go beyond 9.5 million units, compared with 10.15 million annually sold by Toyota and 9.9 million units sold by Volkswagen, NHK said.
Mitsubishi is attempting to turn itself around after a bombshell admission last month that it has been cheating on fuel tests for years.
The scandal - reported to cover almost every model sold in Japan since 1991 - also includes mini-cars produced by Mitsubishi for Nissan as part of a joint venture.
It was Nissan that first uncovered the problems with Mitsubishi's fuel economy data, but Mitsubishi has said it had no part in the cheating.
When the scandal first broke in April, Mitsubishi's stock value plunged 40 per cent, raising concerns about the company's future, but on Wednesday the firm ruled out a bailout from its top shareholders.
"Our company's finances are relatively healthy. At this point, we think we can do this on our own," Mitsubishi chairman Osamu Masuko told reporters.
So far, Mitsubishi has confirmed that four models and over 600,000 vehicles - all sold in Japan - were involved in the fuel cheating, but warned the number of cars affected would likely rise.
Mitsubishi was pulled from the brink of bankruptcy a decade ago after it was discovered that it covered up vehicle defects that caused fatal accidents.
The vast Mitsubishi group of companies stepped in with a series of bailouts, saving the embattled firm.