Nissan confirms plans to take 34% stake in scandal-hit Mitsubishi

Japanese auto colossus Nissan has agreed to pay 237bn yen (£1.5bn) for a third of rival Mitsubishi Motors, which is reeling from admissions it falsified fuel economy data.

In taking the 34% stake, which is subject to approval from regulators and Mitsubishi shareholders, Japan's second-largest carmaker will step up its development and manufacturing partnership with its smaller rival.

Nissan chief executive Carlos Ghosn said the deal was "a breakthrough transaction and a win-win" for both companies.

"We will support Mitsubishi Motors as they address their challenges and welcome them as the newest member of our enlarged alliance family," he said.

Osamu Masuko, chief executive at Mitsubishi Motors, said the agreement would create long-term value for both companies.

Mitsubishi lost around $3bn off its market cap after the eruption of its third scandal in the last two decades, when it admitted overstating the fuel efficiency of at least four of its models, including two sold under Nissan's badge.