Mitsubishi Buys Back 10% of Its Shares From Nissan
Mitsubishi announced yesterday (November 7) that it has decided to buy back a significant portion of its shares from Nissan. In a press release issued from Japan, the company announced that it was asking the Tokyo Stock Exchange to purchase up to 149,028,300 shares at the equivalent of $3.01 per share at current exchange rates, as reported by Car and Driver.
This means that Mitsubishi will get back 10.02% of the shares held by Nissan, reducing the latter's stake in the smaller company from 34.07% to 24.05%. Despite this transaction, Mitsubishi has stated that the two companies will continue to collaborate on various projects.
We know that the partnership has enabled Mitsubishi to offer an Outlander based on the Nissan Rogue when the model is renewed in 2021.
The time was not right for announcements about future cooperation. There's also the fact that there's a third partner in the venture, Renault, with whom Nissan has long been associated. We do know that plans that have already been shared include a mid-size pickup for the North American market.
We'll have to wait for confirmation, of course, as everything is always subject to change, especially with projects and collaborations of this nature.
What's interesting about this story is that the transaction comes at the same time as Nissan's announcement of 9,000 job cuts worldwide, as well as a 20% reduction in global production capacity. The company has revised its profit forecasts, cutting its annual operating profit by 70% to 975 million.
Nissan's financial position used to be stronger, that much seems obvious. It needs cash, and Mitsubishi's share buyback obviously helps.
Of course, the two companies haven't made any connections between the events, but everything is happening at once, and it's normal to make assumptions and draw certain conclusions.
For Mitsubishi, this is an interesting step forward and a sign that things are going quite well.