Nissan Motor has agreed to buy a 34 per cent stake in Mitsubishi Motors, taking de facto control with a $2.2 billion bet that bails out its smaller rival.

The deal is a lifeline for Mitsubishi Motors which is mired in its third scandal in two decades and has had $3 billion wiped off its market value after confessing to manipulating fuel economy data. Yet it should also be a boost for Nissan.

Japan's second largest car-maker has struggled to make inroads into southeast Asia in countries like Thailand and the Philippines where Mitsubishi's models are popular.

Under Thursday’s deal Mitsubishi Motors will issue new shares to Nissan at a 5.3 per cent discount to Wednesday’s close, raising 237.4 billion yen. That will hand Nissan just over a third of the group, enough to wield control under Japanese shareholding rules.

– (Reuters)