Toyota announced Friday that it intends to take complete control of Daihatsu Motor Co. in a $3 billion deal aimed at strengthening its small car operations.
The goal is to turn Daihatsu, which is currently a Toyota subsidiary, into a global brand, according to Reuters. Toyota is currently focused on growing markets for smaller cars, which it says are becoming more popular due to environmental and traffic concerns as well as economic development.
The Japanese automaker currently owns 51.2 percent of Daihatsu, and having full control of the company will allow it to adopt Toyota's next generation technologies.
"We see this as the perfect opportunity to cement our relationship with Toyota, and, by doing so, to embark on a new period of growth, and to elevate the Daihatsu brand to a global standard," Daihatsu said in a statement.
The deal will see Toyota swap 26 percent of its own shares for the 48.8 percent of Daihatsu that it doesn't currently own and delist the company's shares on July 27, The Wall Street Journal noted.
Toyota President Akio Toyoda said at a press conference Friday in Tokyo that the deal was "an opportunity for us both to stop feeling that we need to go it alone," but he added that Toyota will keep the Daihatsu brand.
"The Daihatsu brand will never disappear- let me assure you that," Toyoda said in a statement, Bloomberg reported. "It will be like Mini for BMW. That's the sort of goal we should aim for."
Toyota has been working with fellow Japanese automakers in order to deal with tougher environmental standards and slower global sales growth. The company said last year that it would increase collaboration with Mazda Motor Corp. and is currently reportedly looking into forming an alliance with Suzuki Motor Corp.
Daihatsu makes minicars with 660cc engines in Japan and compact cars in Southeast Asia, according to WSJ. The deal will also give Toyota the chance to work closely with Daihatsu's engineers.
Daihatsu has experienced a jump in their shares since reports surfaced earlier this week about the deal with Toyota.