• Reuters, Kyodo

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Nissan Motor Co. CEO Carlos Ghosn is expected become chairman of Mitsubishi Motors Corp. as Japan’s second-biggest automaker snaps up 34 percent of its smaller peer, sources said Wednesday.

With Ghosn actively involved in the management of Mitsubishi Motors, Nissan aims to reform the scandal-hit company.

Ghosn, who also serves as CEO of Renault SA, Nissan’s alliance partner, has asked Mitsubishi Motors Chairman and President Osamu Masuko to remain president when Nissan takes a controlling stake in an automaker recovering from a mileage-cheating scandal.

While shares of Mitsubishi Motors rose as much as 10 percent Wednesday, the firm also revised its business forecast for fiscal 2017, saying that its net loss will be widened to ¥240 billion from the previous projection of ¥145 billion due to the strong yen and sluggish sales overseas.

Nissan in May said it would buy control of Mitsubishi for around ¥237 billion ($2.3 billion) after Mitsubishi admitted to falsifying the mileage on four minivehicle models, including two produced for Nissan.

The admission prompted a sell-off of Mitsubishi Motors shares.

In August, Mitsubishi Motors was also found to have overstated the mileage of eight additional models, including the Pajero and Outlander sport utility vehicles. The automaker blamed poor communication, lax governance and internal pressure for its lack of compliance.

After Nissan’s purchase is finalized, Mitsubishi group companies — trading house Mitsubishi Corp., Mitsubishi Heavy Industries Ltd. and Bank of Tokyo-Mitsubishi UFJ — will see their total shareholding diluted to around 17 percent.

Nissan has said it will refrain from selling its stake to a nongroup company for 10 years without Mitsubishi Motors’ consent.

Mitsubishi Motors will make a formal decision on executive appointments after a shareholders meeting in December. Nissan is set to close the deal by the end of the year.

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