Hot on the heels of yesterday's stunning revelation that Mitsubishi Motors probably lied about fuel economy stats on all of its Japanese-market vehicles comes word that the troubled automaker has sold a controlling stake of its shares to Nissan.
The deal includes Nissan's purchase of 506.6 million shares in Mitsubishi Motors, at a price hovering just under $2.2 billion. That will put 34 percent of Mitsubishi Motors stock in Nissan's hands, which is enough to wield control under Japanese law.
Mitsubishi's other major investors are members of the Mitsubishi Group, like Mitsubishi Heavy Industries. There may have been some discussion of them ceding enough stock to allow Nissan a complete takeover of Mitsubishi Motors, but instead, their holdings in the company will be diluted to roughly 22 percent.
As humbling as this development may sound for Mitsubishi--and daunting for Nissan--it's actually a win-win.
Obviously, Mitsubishi gets a much-needed cash infusion in the midst of yet another scandal*. Since the company's initial announcement in April, it's lost a staggering $3 billion in market value.
Meanwhile, Nissan gets a problem child facing a flurry of fines, endless investigations, and mountains of bad press. But eventually, the fuel economy scandal will pass, and Nissan will be left in control of an automaker that makes very popular small cars and has significant market share in some countries where Nissan lags.
It's also a win for Mitsubishi dealers in the U.S. The cost of the current scandal could have forced the automaker to scale back operations, and given Mitsubishi's fair-to-middling performance in North America, it's entirely possible that it could've chosen to reduce its footprint. Now, that's less likely.
Accordingly, Nissan and Mitsubishi staged a press conference today in Japan where they extolled the virtues of this "strategic alliance", which was apparently under discussion long before the fuel economy scandal broke.
But let us get this straight: Mitsubishi basically flubbed up in a major way, and another automaker rushed in with cash in hand to create a partnership? Sergio Marchionne, if you're reading this, are you getting any ideas?
For more on this story, visit our colleagues at Motor Authority.
*At the turn of the 21st century, the company admitted to covering up reports of flaws in its vehicles and later lost huge sums of money when subprime borrowers defaulted on the company's popular no-interest loans. After the former fiasco, DaimlerChrysler came to the rescue--for a similar 34 percent stake in the company.