Enlarged Alliance Ranks Among Top Three Global Automotive Groups
YOKOHAMA, Japan (October 20, 2016) – Nissan Motor Co., Ltd., (“Nissan”) today completed its acquisition of a 34% equity stake in Mitsubishi Motors (“MMC”) and became its largest shareholder.
MMC will also become part of the global Alliance with Nissan and Renault. With the addition of MMC, the Alliance will be in the world’s top three automotive groups by global volumes, with sales of 10 million units in fiscal year 2016.
Nissan Chairman and Chief Executive Officer Carlos Ghosn announced that Nissan and MMC would collaborate on joint purchasing, deeper localization, joint plant utilization, common vehicle platforms, technology-sharing and an expansion of the companies’ combined presence in both developed and emerging markets.
“The combination of Nissan, Mitsubishi Motors and Renault will create a new force in global car-making,” said Ghosn. “It will be one of the world’s three largest automotive groups, with the economies of scale, breakthrough technologies and manufacturing capabilities to produce vehicles to serve customer demand in every market segment and in every geographic market around the world.”
Ghosn predicted that through its partnership with MMC, Nissan would target synergy benefits worth 24 billion yen in fiscal year 2017, rising to 60 billion yen in fiscal year 2018 and beyond. The gains will contribute to increased earnings per share worth an estimated 4 yen per share in fiscal year 2017 and 10 yen per share in fiscal year 2018 – on top of any earnings accretion linked to Nissan’s overall shareholding in Mitsubishi Motors.
Nissan offered its assistance at the request of Osamu Masuko, president and chief executive officer of MMC, following the company’s fuel economy crisis. The two companies have cooperated on kei-cars for the Japanese market over the past five years.
“We are committed to assisting Mitsubishi Motors as it rebuilds customer trust,” said Ghosn. “This is a priority as we pursue the synergies and growth potential of our enlarged relationship.”
As part of this strategy, Nissan has nominated four representatives to the Board of MMC, including Ghosn as chairman-elect.
The other nominees are Hitoshi Kawaguchi, chief sustainability officer and head of global external affairs; Hiroshi Karube, global controller and global asset manager; and Mitsuhiko Yamashita, Nissan’s current representative on the Mitsubishi Motors board.
At Masuko’s request, Yamashita joined the company earlier this year as executive vice president of development and as a member of its executive committee.
Ghosn has announced a number of other management changes, effective November 1, to allow him to continue to focus on maintaining Nissan’s momentum in delivering performance, while at the same time supporting Masuko at MMC.
Ghosn has proposed to the Nissan Board, which has approved, the appointment of Hiroto Saikawa, currently chief competitive officer, as co-chief executive officer.
Saikawa will be succeeded as chief competitive officer by Yasuhiro Yamauchi, currently Alliance executive vice president of purchasing.
Veronique Sarlat-Depotte, currently deputy to Yamauchi will assume the responsibility as Alliance executive vice president of purchasing and head of the Renault Nissan Purchasing Organization. She will be supported by Makoto Uchida who will take responsibility for purchasing at Nissan.
Also at the request of Masuko, the management team of MMC will be further strengthened by current Nissan Chief Performance Officer Trevor Mann, who will become chief operating officer of MMC.
Mann will be replaced as chief performance officer by Jose Munoz who will continue as chairman of Nissan’s North American region.
Ghosn concluded: “At a time of unprecedented change in the global auto industry, this strategy will build on our existing strengths and management capabilities to ensure increased competitiveness, better products for our customers and attractive returns for shareholders.”
MITSUBISHI MOTORS JOINS RENAULT-NISSAN ALLIANCE
- MMC to receive strategic, operational and management support from Nissan
- Synergy benefits to enhance MMC profit margins and earnings per share
- Carlos Ghosn, Nissan chairman and CEO, named chairman-elect of MMC
- New role created of Director for Global Risk Control
CIRENCESTER – Mitsubishi Motors Corporation (MMC) announces that Nissan Motor Co., Ltd. (Nissan) has become its largest shareholder after completing the purchase of 34% of MMC-issued stock for 237 billion JPY.
As part of Nissan’s strategic investment, MMC will become a full member of the 17-year strong global alliance between Nissan and Renault – paving the way for synergies to enhance profit margins and earnings per share.
Nissan Chairman and Chief Executive Officer Carlos Ghosn has been nominated to become chairman of the Board. Ghosn will be joined by three other Nissan nominated directors, including Mitsuhiko Yamashita, Nissan’s former executive vice president of research and development, who joined MMC earlier this year as head of development. The other nominees are Hitoshi Kawaguchi, Nissan chief sustainability officer and head of global external affairs, and Hiroshi Karube, Nissan global controller and global asset manager.
MMC President and Chief Executive Officer Osamu Masuko requested that Nissan also provide a senior executive to join the company’s executive committee to bolster MMC’s management. Trevor Mann, currently Chief Performance Officer of Nissan, will become Chief Operating Officer of MMC.
“I welcome Nissan’s willingness to provide strategic, operational and management support as our new lead shareholder,” said Masuko. “As part of our Board and management team, Nissan will help us to rebuild customer trust in our company and maximise potential future synergies through our deeper alliance.”
MMC will appoint a new role of director for global risk control to report directly to the chief executive officer, who will oversee compliance and risk control. This director will regularly report to the board on moves to enhance governance at MMC.
The three largest institutional shareholders in MMC – Mitsubishi Heavy Industries, Mitsubishi Corporation and The Bank of Tokyo-Mitsubishi UFJ – have welcomed Nissan’s investment and pledged their support for its board nominees. Moving forward, these three Mitsubishi institutional shareholders together with Nissan will maintain a more than 51 percent of the share capital.
Nissan and MMC will begin cooperating on a wide-ranging synergy program, building on a five-year alliance in minicars between the two companies.
The two companies have identified a number of valuable synergies in areas including:
- Joint purchasing cost-reduction
- Deeper localisation in operations around the world
- Joint plant utilisation
- Common vehicle platforms
- Technology sharing
- Cooperation in emerging and developed markets; and
- The use of the Nissan Sales Finance Company to serve MMC customers in any market where mutually beneficial.
The partnership is expected to generate significant recurring synergies for MMC, equivalent to a 1 percentage point increase in operating profit margin in fiscal year 2017, 2 percentage points in fiscal year 2018, and more than 2 percentage points in fiscal year 2019. The projected synergies are also forecasted to enhance MMC earnings per share in fiscal year 2017 by 12 yen per share, and by 20 yen per share in fiscal year 2018.
Ghosn said: “The expanded Alliance will be one of the largest automotive groups in the world, with annual sales of 10 million units in fiscal year 2016. The addition of Mitsubishi Motors will build on the entrepreneurial spirit and management cooperation that has characterised our alliance with Renault for 17 years. I am confident this will benefit all stakeholders.”