Mitsubishi Motors Corp and Peugeot-Citroen are in talks for a capital tie-up that would give Europe's second biggest carmaker a 30 percent to 50 percent stake in the Japanese automaker, the Nikkei business daily said.
The companies are in the final stages of negotiations, with Mitsubishi likely to issue 200 billion to 300 billion yen in new shares through a private placement to Peugeot, the paper said.
Peugeot is seeking a stake of at least 50 percent in Mitsubishi, effectively placing the Japanese automaker under Peugeot's control, the daily reported.
Mitsubishi may also potentially buy an interest in Peugeot, the Nikkei added.
While a new share issuance could be authorized at a board meeting, given that Peugeot would gain management control, Mitsubishi would seek approval for the deal at a shareholders meeting to be held in June, the paper said.
Peugeot was not immediately available for comment.
Earlier this year, the two carmakers had agreed to cooperate in developing and marketing electric cars.
(Reporting by Brenton Cordeiro in Bangalore; Editing by Anil D'Silva)