Nissan buys 34 percent of beleaguered Mitsubishi

YOKOHAMA, Japan, May 12 (UPI) -- Nissan Motor Co. announced Thursday it will buy a 34 percent stake in Mitsubishi Motors Corp., offering the beleaguered company a $2.18 billion lifeline.

Nissan's investment comes as Mitsubishi deals with declining sales and stock values, and a government investigation after it admitted it falsified fuel economy ratings for a range of small cars sold in Japan and South Korea.

The purchase, expected to be concluded by May 25, means Nissan will be Mitsubishi's largest shareholder, and will prompt a realignment of Japan's auto industry. Eight car makers have interlocking working agreements, and Nissan itself was the beneficiary of an alliance, similar to its new alliance with Mitsubishi, with the French automaker Renault in 1999.

"Nissan is determined to preserve and nurture the Mitsubishi Motors brand. We will help this company address the challenges it faces, particularly restoring consumer trust in the fuel-economy performance," Nissan CEO Carlos Ghosn said in Yokohama Thursday. Ghosn is also CEO of Renault.

Renault owns 43 percent of Nissan, and Nissan has a 15 percent stake in Renault. The purchase by Nissan of the shares in Mitsubishi comes as Mitsubishi stock is worth about half of its price prior to the fuel-economy ratings scandal, although the value of Mitsubishi stock rose 16 percent after news of the deal was announced. Nissan stock fell 1.4 percent on Japanese exchanges.