- Honda and Nissan may be about to walk away from a planned merger
- Reports out of Japan claim Honda wants increased control over Nissan
- The merger would be worth $58 billion, would create one of world’s largest automakers
A decision on the merger between Honda and Nissan proposed by the automakers last December was anticipated to arrive in January, but now there are reports that no deal might happen at all.
Citing several sources, Japan’s Asahi Shimbun reported on Wednesday that the boards of Honda and Nissan plan to meet soon to formalize the termination of the merger.
According to the report, executives at Honda were frustrated by Nissan’s slow progress, including in its restructuring plan, which calls for 9,000 job cuts and a 20% reduction in production, and proposed taking more control of Nissan and potentially even turning it into a subsidiary. Such a proposal deviates from the initial one, in which Nissan would retain its decision-making powers.
The Financial Times reported on Wednesday that Nissan’s poor financial performance has caused its market capitalization to shrink to just one-fifth of Honda’s, shifting the balance of power in the negotiations.
In response to some of these reports, which might or might not serve as part of the negotiation process itself, Nissan issued a statement confirming that discussions have not ended. “Based on the memorandum of understanding signed on December 23 last year, Honda and our company are in the stage of advancing various discussions, including the contents of the report, and we plan to establish a direction and make an announcement around mid-February,”
The merger, if it were to go ahead, would be worth an estimated $58 billion and would create the world’s third- or fourth-largest automaker.
Mitsubishi, which is already partially owned by Nissan, was also invited to join the merger, with the shares of all three automakers to be transferred into a joint holding company. However, reports from January claimed Mitsubishi wanted to sit out the merger due to its smaller relative size and the lack of independence it would have within the merged entity.