Auto giant DaimlerChrysler looks set to
take a stake of around 30 percent in Japan's ailing Mitsubishi
Motors, Japanese media reports said Tuesday, which would give it
a much-needed base in Asia. A deal would also be a lifeline for
debt-burdened Mitsubishi, which in a rapidly consolidating
industry has looked increasingly isolated and unable to meet the
long-term research costs demanded by stricter environmental
"In theory, it's potentially a very good match," said
Howard Smith, an auto analyst at ING Barings in Tokyo.
DaimlerChrysler AG is the world's sixth largest auto
manufacturer and Mitsubishi Motors Corp is Japan's
fourth-largest maker of full-size cars. Together they would be
the world's third-largest, producing around 6.5 million vehicles
Business daily Nihon Keizai Shimbun said talks were in the
final stages and the two were discussing the size of the stake.
Other reports said they aimed for an agreement this month.
The German-U.S. auto giant could take control of the
Japanese automaker with a holding of 33.4 percent, though
Mitsubishi would want to maintain as much independence as
A 30 percent stake would be worth around 92 billion yen
($854.9 million) at current market share prices.
Both companies declined to directly comment on the reports.
"We've been talking to various companies on various topics
and at present, nothing has been decided," Mitsubishi said in a
statement, a refrain it has long repeated.
Mitsubishi's shares ended bid-only at 413 yen, up by its
daily limit, compared with a close of 333 yen Monday.
DaimlerChrysler ended in New York Monday at 62-1/8, down 1/07.
But some analysts said a deal may not be a definite shoo-in,
and that the stake size could be a thorny issue.
"DaimlerChrysler is probably saying it wants nothing less
than 33.4 percent and Mitsubishi is likely trying to keep it at
about 25 percent," said Tadayuki Nakamura, an analyst at the
Sakura Institute of Research. "The situation still looks
Although Mitsubishi and Chrysler have had a long
relationship, with Mitsubishi still making Chrysler brand
compact cars at its Illinois plant, its relationship with
Daimler has been rocky.
The two explored plans for a comprehensive business tie-up
in the early 1990s that came to little and was reported to have
ended in some ill-feeling.
DaimlerChrysler had also been in talks with Nissan Motor Co
early last year but broke them off citing Nissan's debt levels.
Mitsubishi has 1.75 trillion yen in debt and analysts had
assumed DaimlerChrysler would also balk at Mitsubishi.
Recent market speculation has also centered on Ford Motor
Co, which is talking to Mitsubishi about the future of a Dutch
joint venture with Volvo Cars, a Ford unit, and is seen by many
analysts as a more suitable partner for it than DaimlerChrysler.
Some also speculated that Mitsubishi may be trying to play
off DaimlerChrysler against Ford.
This said, both DaimlerChrysler and Mitsubishi are running
out of time and this pressure, more than a natural meeting of
minds, is likely to have spurred talks.
DaimlerChrysler needs to secure a base in Asia, where it is
also keen to move into the truck market and the number of
potential takeover candidates is small. It is also keen to find
a small car partner and Mitsubishi has this expertise as well as
its acclaimed gasoline direct injection engine technology.
Although Mitsubishi tied-up with Swedish truckmaker AB Volvo
in trucks last year, the future of Mitsubishi's passenger car
division had been left hanging.
The need to plan for new models at Mitsubishi's venture with
Ford's Volvo car unit, which wants to use Ford platforms, also
dictated that Mitsubishi and Ford come to an agreement by
The Nihon Keizai said DaimlerChrysler had agreed to take
over the Ford half of the venture.
A DaimlerChrysler-Mitsubishi alliance also throws up a whole
lot of implications for other automakers, including questions
over the fate of Mitsubishi's tie-up with truckmaker AB Volvo.