Nissan Motor Co., Ltd., will take a 34 percent stake in Mitsubishi Motors Corporation after the two companies signed a Basic Agreement today to form a strategic alliance between the two automakers. The deal, worth 237 billion yen is extending an existing partnership between Nissan and Mitsubishi under which the two companies have jointly collaborated for the past five years.

Under this Basic Agreement, Nissan and Mitsubishi have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization, and growth markets.

Carlos Ghosn, chief executive and president of Nissan, said: “This is a breakthrough transaction and a win-win for both Nissan and Mitsubishi Motors. It creates a dynamic new force in the automotive industry that will cooperate intensively, and generate sizeable synergies. We will be the largest shareholder of MMC, respecting their brand, their history and boosting their growth prospects. We will support MMC as they address their challenges and welcome them as the newest member of our enlarged Alliance family.”

Osamu Masuko, chairman of the board and chief executive of MMC, said: “Through its long history of successful partnerships Nissan Motor has developed a deep knowledge of maximizing the benefits from alliance partnerships. This agreement will create long term value needed for our two companies to progress towards the future. We will achieve long term value through deepening our strategic partnership including sharing resources such as development, as well as joint procurement.”

With this development, Nissan becomes the largest shareholder of Mitsubishi Motors Corporation.

MMC and Nissan expect Mitsubishi Heavy Industries, Mitsubishi Corporation, and The Bank of Tokyo – Mitsubishi UFJ to maintain a significant collective ownership stake in Mitsubishi Motors, and to support the strategic alliance.

The transaction is subject to the signing of a definitive Alliance Agreement, expected by the end of May, 2016, the signing of a shareholders agreement with the current Mitsubishi Group shareholders of MMC and regulatory approvals. It is expected to close by the end of the year.

The decision by Nissan to acquire a strategic stake in Mitsubishi marks the latest expansion of its Alliance model which started with Renault 17 years ago. Nissan has also acquired stakes or signed partnerships with other automotive groups including Daimler and AvtoVaz.