DaimlerChrysler AG has agreed to pay $297 million for AB Volvo’s 3.3 percent stake in Mitsubishi Motors Corp. to expand its alliance with the Japanese firm into commercial vehicles, MMC announced in Tokyo on Wednesday.
The deal will increase DaimlerChrysler’s stake in MMC to 37.3 percent — exceeding the 34 percent owned by other companies in the Mitsubishi group — and will enable the German-American auto giant to expand its commercial vehicle operations in Asia. Its tieup with MMC has so far been restricted to cars.
Juergen E. Schrempp, president and chief executive officer of DaimlerChrysler said in a statement released after the automaker’s shareholders’ meeting in Germany, “This marks a major step toward the completion of our Asian commercial vehicle strategy.”
The agreement also includes the transfer of all rights to Volvo’s former working agreement with MMC in its truck business.
Under the earlier agreement, the Swedish automaker marketed the Mitsubishi Fuso Canter light duty truck in Europe and Canada. This operation will gradually transfer to DaimlerChrysler, as will the joint development of a midsize truck.
With the termination of its truck-and-bus tieup with Volvo, MMC will postpone spinning off its commercial vehicle operations into an in-house company by the end of 2001. Volvo had earlier agreed to hold a 19.9 percent stake in the new truck venture.
Despite the latest changes, MMC said it has no plans to increase the number of DaimlerChrysler directors on its board or the management structure.
Four DaimlerChrysler executives, including Rolf Eckrodt — who became MMC’s chief operating officer in January — sit on MMC’s 15-member board.
Auto industry analysts said, however, that MMC will be required by DaimlerChrysler to promote further restructuring to improve its management following a scandal over the coverup of consumers’ complaints over defects In December 1999, Volvo purchased a 5 percent stake in MMC. DaimlerChrysler took a controlling 34 percent in MMC in October, reducing Volvo’s stake in the firm to 3.3 percent.
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