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Daimler circles Mitsubishi
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March 22, 2000: 1:55 p.m. ET
Carmaker said close to buying 33% stake in Japanese rival for $1.86B
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LONDON (CNNfn) - DaimlerChrysler is poised to snap up a key stake in Japan's Mitsubishi Motors in a deal estimated to cost $1.86 billion that would transform the German automaker's Asian presence and vault it into third place in the global car rankings, according to reports published Wednesday.
The German-U.S. company is expected in the next few weeks to take a 33.4 percent holding in Mitsubishi, giving it veto power over board decisions. Mitsubishi Motors President Katsuhiko Kawasoe was authorized by the board Wednesday to decide on an alliance with an overseas automaker.
Neither company confirmed the reports. Daimler CEO Juergen Schrempp said Tuesday he hoped to seal a deal with an Asian automaker.
DaimlerChrysler (FDCX) has been seeking a beach head in Asia as economies in the Pacific region recover from crises in the late 1990s. Talks with Japan's Nissan Motor broke down last year, allowing France's Renault (PRNO) to step in and acquire a 38 percent stake.
Mitsubishi is viewed as the last available target in the Japanese market following the Renault-Nissan deal, a link between General Motors (GM: Research, Estimates) and Subaru parent Fuji Heavy Industries, and Ford's (F: Research, Estimates) purchase of a stake in Mazda Motor. Only Toyota and Honda remain strong, fully independent firms in Japan.
DaimlerChrysler and Mitsubishi together make 6.5 million vehicles annually and a combination would catapult them past Toyota and Volkswagen into the third-place spot among global automotive firms, trailing only General Motors and Ford.
Mitsubishi's shares closed down 1.2 percent at 410 yen Wednesday, while DaimlerChrysler stock rose 0.7 percent in Frankfurt to 68.60 euros. Analysts noted that a deal isn't certain, pointing out the hurdles raised by Mitsubishi's truck division, in which Sweden's Volvo has nearly a 20 percent stake. Daimler and Volvo compete in the market for heavy trucks. 
-- from staff and wire reports
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