Japanese car manufacturers Nissan Motor Co. and Mitsubishi Motors Corp. announced Thursday they have signed an agreement “to form a far-reaching strategic alliance,” which will extend the five-year collaboration between the two companies. As part of the new agreement, Nissan will purchase 34 percent equity stake in Mitsubishi Motors for 237 billion yen ($2.18 billion).

The two automakers will “cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets,” according to the joint statement issued by the companies.

Nissan will purchase 506.6 million newly issued Mitsubishi Motors' shares at a price of 468.52 yen per share, according to terms of the transaction, and will become the largest shareholder of Mitsubishi Motors when the transaction is complete. The share price for the deal is the volume weighted average price of the stock on the Tokyo Stock Exchange from April 21 to May 11.

The deal, however, is subject to a definitive “Alliance agreement,” expected to be signed by the end of May. Approval from current Mitsubishi Group shareholders and regulatory authorities is also required.

Nissan’s Alliance model has, over the years, included its strategic 17-year partnership with Renault, as well as arrangement with other automotive groups including Daimler and AvtoVaz.

Carlos Ghosn, chief executive and president of Nissan, said: “We will support MMC [Mitsubishi Motors Corp.] as they address their challenges and welcome them as the newest member of our enlarged Alliance family.”

Among the challenges facing Mitsubishi Motors is a cheating scandal that erupted in April after the company agreed that it overstated the fuel economy in some of its models sold in Japan. It has been struggling with falling sales and rising costs since.

Nissan is Japan’s second-largest car company in terms of global sales volume, and Mitsubishi Motors is the country’s sixth-largest. Buying a stake in Mitsubishi Motors will also give Nissan greater access to Southeast Asian markets, such as Thailand, which offer better growth prospects than the domestic market.

Once the transaction is closed, “MMC will propose Nissan nominees as board directors in proportion to Nissan’s voting rights, including a Nissan nominee to become Chairman of the Board,” the joint statement said.

Nissan shares closed 1.44 percent lower on the Tokyo Stock Exchange Thursday, while Mitsubishi Motors shares gained 16.16 percent at close.