DaimlerChrysler AG, the world's fifth-largest automaker, has agreed with Mitsubishi Motors Corp. to take a controlling stake in the Japanese automaker, MMC sources said Wednesday.
MMC approved the deal at an extraordinary board meeting in the morning, according to the sources.
An official announcement could be made by the end of this week.
MMC President Katsuhiko Kawasoe and DaimlerChrysler Cochairman Juergen Schrempp will soon exchange memorandums, the sources said.
The two companies are likely to sign a formal agreement in May or later, they said.
However, MMC will continue its alliance with Swedish truck maker AB Volvo, and its agreement with U.S.-German auto giant DaimlerChrysler will be limited to its passenger car department, the sources said.
The move would mean that only two of Japan's 11 Japanese automakers remain unaffiliated with a foreign automaker: the Toyota Motor Corp. group and Honda Motor Co.
According to the sources, DaimlerChrysler will buy a 33.4 percent equity stake in MMC, a percentage that, under Japanese law, gives the shareholder the right to veto proposals concerning company management.
In negotiations so far, DaimlerChrysler has also agreed to acquire the shares held by Ford Motor Co. in Netherlands Car B.V. (Nedcar), a fifty-fifty joint Dutch venture owned by Ford and MMC.
MMC had demanded that DaimlerChrysler purchase Ford's stake in Nedcar as a prerequisite for acquiring a controlling stake in MMC.
Meanwhile, according to the company sources, the two sides have agreed that the posts of president and chairman at MMC will continue to be held by Mitsubishi officials.
DaimlerChrysler, however, has persuaded MMC to accept the dispatch of a number of top DaimlerChrysler officials to MMC.
The two sides also agreed that MMC will retain the Mitsubishi brand and that employees will not be laid off.