Nissan Motor is in the final stage of talks to buy a 34 percent stake in scandal-hit Mitsubishi Motors, Japan's public broadcaster NHK reported today.
The deal, reported to be worth USD 1.8 billion (1.57 billion euros), would amount to an effective acquisition by Nissan Motors, making it the top shareholder ahead of Mitsubishi Heavy Industries, which holds a 20 per cent stake.
The reports come as Mitsubishi seeks to turn itself around after a bombshell admission last month that it has been cheating on fuel-economy 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 fuel cheating.
The Japanese automakers are expected to hold meetings today on the terms of the tie-up, the Nikkei business newspaper reported.
When the scandal first broke in April, Mitsibishi's stock value lunged 40 percent raising concerns about the company's future, but earlier 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.
Mitsubishi's Tokyo-listed shares rose 2.27 per cent to 495 yen on Wednesday.
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.
Under the terms of the transaction, Nissan will purchase
506.6 million newly-issued MMC shares at 468.52 yen per share. The price reflects the volume weighted average price over the period between April 21, 2016 and including May 11, 2016.
MMC and Nissan said they expected 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.
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, the statement added.
