TOKYO - Mitsubishi Motors Corp. and AB Volvo have teamed up in the truck and bus arena.
The move would give Volvo 20 percent of Mitsubishi's truck and bus operations. Volvo also is adding the truck and bus operations of Sweden's AB Scania.
The combination of Volvo, Mitsubishi and Scania would create the world's largest manufacturer of medium- and heavy-duty trucks and buses.
The Volvo-Mitsubishi deal may increase pressure on DaimlerChrysler to buy troubled Nissan Diesel Motor Co.
The stock-based alliance would combine Volvo's strengths in medium-duty and especially heavy-duty trucks and buses and its operations in Europe, North America and South America, with Mitsubishi's stronger presence in light trucks and in Asia.
Under the proposed deal, financially strained Mitsubishi gets its cash up front and has to pay out funds over the next three years.
By year end, Volvo will pay about ¥29 billion, or $276 million at current exchange rates, for a 5 percent stake in Mitsubishi Motors through an issue of new shares.
Mitsubishi, on the other hand, plans to acquire up to 5 percent of Volvo shares on the open market by the end of 2002.
In addition, Mitsubishi would spin off its truck and bus development, production and sales operations into a new subsidiary by the end of 2001. Volvo then would buy 19.9 percent of that subsidiary.
Mitsubishi plans to send one or two nonmanagement board members to Volvo's truck and bus subsidiary, and Volvo will send one or two similar executives to Mitsubishi's new subsidiary.
Mitsubishi President Katsuhiko Kawasoe said that buying 5 percent of Volvo will cost $476 million to $571 million.
Details of a formal agreement are expected by mid-December.
Volvo's previous agreement to acquire Swedish truckmaker Scania is pending approval from the European Commission.
AB Volvo Chairman Leif Johansson said Volvo, Scania and Mitsubishi combined sold about 253,000 medium- and heavy-duty trucks and buses in 1998. DaimlerChrysler sold about 220,000.