Nissan Motor (NSANY) and Mitsubishi Motors Corporation (MMTOF) announced that they have signed a Basic Agreement to form a far-reaching strategic alliance between the two Japanese automakers. Following an MMC share issue, Nissan will take a 34% equity stake in MMC for Y237B. The strategic alliance will extend an existing partnership between Nissan and MMC, under which the two companies have jointly collaborated for the past five years.

Nissan and MMC have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets. Under the terms of the transaction, Nissan will purchase 506.6 million newly-issued MMC shares at a price of 468.52 yen per share. The price per share reflects the volume weighted average price over the period between April 21 2016 and including May 11 2016. Nissan will become the largest shareholder of MMC on closing. MMC and Nissan expect Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo - Mitsubishi UFJ (MTU) 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. It is expected to close by the end of the year. The decision by Nissan to acquire a strategic stake in MMC marks the latest expansion of its Alliance model, built around a 17-year cross shareholding arrangement with Renault. Nissan has also acquired stakes or signed partnerships with other automotive groups including Daimler, and AvtoVaz. On closing, MMC will propose Nissan nominees as board directors in proportion to Nissan's voting rights, including a Nissan nominee to become Chairman of the Board.