UPDATE: Nissan to Acquire 34% of Mitsubishi Motors

Nissan Motor Co. has agreed to invest 237 billion yen ($2.2 billion) to gain a controlling 34% stake in troubled Mitsubishi Motors Corp. The boards of the two companies expect to formalize the deal by the end of May.

Nissan will acquire 507 million newly issued shares in MMC for about 469 yen per share.

CEO Carlos Ghosn describes the alliance as a win-win deal that will generate “sizeable synergies” for the partners. Under the agreement, the companies promise to share technologies, product development, vehicle platforms, purchasing and production facilities.

The investment will give Nissan four seats on MMC’s board and enable it to name a new chairman for the smaller company. Nissan also will control corporate governance and management in an effort to improve Mitsubishi Motors’ tarnished reputation.

“We had to do something quite daring” to revive public trust in the company, acknowledges CEO Osamu Masuko.

Last month MMC admitted it had rigged fuel economy ratings for some of its cars for 25 years. The scandal revived memories of the company’s admission more than a decade ago that it had failed to report customer complaints and safety defects for nearly 30 years.

The new alliance strengthens a relationship dating to 2010, when Nissan abandoned minicar production and turned to MMC to supply it with such vehicles. Minicars account for about 40% of the Japanese domestic car market.