Nissan pays US$2.2B for 34 per cent stake in Mitsubishi Motors
The news comes as Nissan reports a 40 per cent drop in profit, blaming a sales slump and currency fluctations
These were similar to the reasons Japanese rival Toyota gave when it estimated a 35 per cent profit hit for the first quarter.
Nissan Motor Co. reported a 71 billion yen (US$651 million) profit for the first quarter. It had a 119 billion yen profit the same period of 2015.
Quarterly sales edged down 1.2 per cent to 3.25 trillion yen ($29.8 billion).
A weak yen had worked as a plus for exporters like Yokohama-based Nissan, but the currency has been strengthening in recent months.
For the fiscal year, Nissan’s profit rose 15 per cent to 523.8 billion yen ($4.8 billion). The automaker forecast a 525 billion yen ($4.8 billion) profit for the fiscal year through March 2017.
Chief Executive Carlos Ghosn announced Thursday that Nissan will spend 237 billion yen ($2.2 billion) to become the top investor in Mitsubishi Motors by purchasing newly issues shares.
Nissan shares dropped 1.4 per cent in Tokyo trading as Japanese media reported that a deal with Mitsubishi was imminent. Mitsubishi Motors issues, on the other hand, surged 16 per cent.
Mitsubishi Motors has been rocked by a scandal over cheating on mileage tests to inflate fuel economy figures for its minicar models. It had another scandal, over a systematic coverup of auto defects, which surfaced in the early 2000s, but the wrongdoing had dated back decades.