YOKOHAMA, Japan (Reuters) - Nissan Motor Co has agreed to buy a 34 percent stake in Mitsubishi Motors Corp, taking de facto control with a $2.2 billion bet that bails out its smaller, scandal-hit rival.

The deal is a lifeline for Mitsubishi Motors, which is mired in its third scandal in two decades and has had $3 billion wiped off its market value after confessing to manipulating fuel economy data.

But it should also be a boost for Nissan. Japan’s second-largest car maker has struggled to make inroads into Southeast Asia, in countries like Thailand and the Philippines, where Mitsubishi’s models are popular.

Mitsubishi and Nissan already cooperate on development and manufacturing with a partnership dating back to 2011, but that deal does not currently involve any cross-shareholding.

Under Thursday’s deal, Mitsubishi Motors will issue new shares to Nissan at a 5.3 percent discount to Wednesday’s close, raising 237.4 billion yen ($2.18 billion).

That will hand Nissan just over a third of the group - enough to wield control, under Japanese shareholding rules.

Nissan Chief Executive Carlos Ghosn said the two would now share and jointly develop technology, and could realize “billions” in synergies by coordinating purchasing, plant utilization and cooperating in growth markets.

“We are determined to preserve and nurture the Mitsubishi Motors brand. We will help this company address the challenges it faces, particularly in restoring consumer trust in its fuel economy performance,” Ghosn said, addressing a joint press conference in Yokohama, south of Tokyo.

Nissan will be able to nominate a third of Mitsubishi Motors’ board, which Ghosn said he believed would be led by a Nissan executive - prompting industry analysts and bankers to forecast a significant reshuffle at the top.

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Mitsubishi Motors admitted last month it overstated the fuel economy of at least four of its models - mini cars sold in Japan, including two sold under Nissan’s badge.

That has badly hit the group, bruising a brand already losing market share and dragging its shares down over 40 percent as investors fretted over potential compensation costs.

Ghosn said he had been “reassured” by Mitsubishi Motors’ Chief Executive Osamu Masuko over the size and scope of the fuel economy troubles, which Masuko said had accelerated discussions.

Mitsubishi Motors shares were untraded before closing up 16 percent at the daily limit. Nissan shares closed down 1.4 percent.

TOUGHER TASK

Ghosn said improving performance in kei cars, a Japanese category of small cars, was one key reason for the deal. Indeed, Nissan will gain a leg up in Japan’s small car market, where it is dwarfed by Suzuki and Toyota’s Daihatsu.

It will also get a lift in fast-growing Asian economies, where Mitsubishi is more readily recognized. Asia excluding China accounted for just 6.5 percent of Nissan’s global retail sales in the year to the end of March.

“The biggest benefit to Nissan would be Mitsubishi’s presence in Southeast Asia,” said Koji Endo, autos analyst at Advanced Research Japan.

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But the deal also leaves Nissan with a much tougher task: ensuring a turnaround at Mitsubishi, without full control.

“Taking a one-third stake feels a bit like a half-measure,” said Kiyoshi Yamanaka at T&D Asset Management.

“For investors, it would be cleaner if they made Mitsubishi Motors a fully owned subsidiary, as Toyota did with Daihatsu, and then took firm control of righting its governance.”

An industry banker familiar with the deal dampened expectations of a full takeover. Sister companies in the sprawling Mitsubishi family are unlikely to sell, he said.

Mitsubishi Heavy Industries Ltd, Mitsubishi Corp, and the Bank of Tokyo-Mitsubishi UFJ, together with subsidiaries held roughly a 34 percent stake in the automaker before the deal. That will be diluted to around 22 percent.

None have yet commented on the tie-up.

Group companies bailed out Mitsubishi Motors in 2004, but had not been expected to step in this time. Mitsubishi Corp reported its first ever loss this week.

Mitsubishi Motors said on Wednesday it had enough cash to weather the fuel-economy scandal - but also warned that non-compliant data may have been used to calculate the fuel economy for more of its cars than previously announced.

After Mitsubishi admitted last month to manipulating fuel economy data, analysts estimated the automaker is facing up to $1 billion in compensation for its customers, along with payments to Nissan.

Alliance partner Renault, Nissan and Mitsubishi have combined sales of about 9.3 million vehicles, approaching those of industry leaders Toyota and Volkswagen AG VOWG_p.DE.

“We have the potential to be in top three,” Ghosn said.