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DaimlerChrysler buys stake in Mitsubishi

DaimlerChrysler AG today agreed to acquire a 34 per cent controlling stake in Mitsubishi Motors Corporation or MMC for $ 2.1 billion, becoming the world's third largest car-maker and gaining a key foothold in Asia.

The deal does not include Mitsubishi's prized truck division, and DaimlerChrysler said it would either pursue expansion on its own in this sector or enter a partnership with another producer in the region.

With this alliance, DaimlerChrysler will strengthen its presence in Japan and the Asian region, company chairman Jurgen E Schrempp said. "Mitsubishi is the ideal partner for us to strengthen our presence in all areas of Asia. This agreement is a milestone in our Asian strategy," Schrempp said in a statement.

The stake purchase by the German-US auto giant will give it the power to veto board decisions under Japanese law. It will be paying 450 yen per share, below Monday's close at 470 yen, which was up 51 yen or 12.2 per cent from Friday.

Both the companies are yet to announce composition of the board and the extent to which DaimlerChrysler will get involved in Mitsubishi.

"With this alliance, we will get access to additional resources. DaimlerChrysler will add potential economies of scale which will enhance the future of our business,'' Mitsubishi Motors president Katsuhiko Kawasoe said.

Schrempp and Kawasoe regarding the design, development, production and design of passenger cars and light commercial vehicles signed a letter of intent. The final contracts will be signed within the next few months.

Mitsubishi and DaimlerChrysler will co-operate globally on passenger cars and compact commercial vehicles, including pickup trucks, but the deal leaves intact Mitsubishi's pact to co-operate in the truck and bus business with Sweden's AB Volvo.

UNI

Business