Toyota said Friday it will make its mini-car unit Daihatsu a wholly-owned company with an aim to expand in emerging markets.
The deal will give Toyota -- the world's biggest automaker -- definitive control over a company that battles with rival Suzuki in Japan's domestic mini-car segment, and also strengthen its footing in Southeast Asia.
Toyota will take complete control of Daihatsu by a share exchange expected to be completed in August, the carmakers said in a joint statement.
Their aim is "to develop ever-better cars by adopting a unified strategy for the small car segment", the statement said.
The companies also want to share resources to finance costs for developing next-generation technologies, they said.
The announcement came two days after reports that Toyota and Daihatsu's domestic rival Suzuki are in talks over a partnership focused on making compact cars for emerging markets, sending shares in both companies soaring.
Toyota's plan to make Daihatsu a wholly-owned company is linked to the tie-up talks, the leading Nikkei business daily and other media reported.
Toyota first established a business alliance with Daihatsu in 1967 and made it a subsidiary by taking a majority stake in 1998.