Nissan’s stock fell sharply on Wednesday following news that the faltering Japanese automaker was abandoning merger negotiations with rival Honda.
Before this, Honda had suggested making Nissan a subsidiary rather than integrating under a new holding company, according to the Nikkei Business Daily and other local media.
According to the Nikkei, Nissan decided to leave the negotiations due to “strong opposition” to this idea within the company. A similar report was released by the private network TBS.
The newspaper also stated that talks to establish a holding company started in December but failed because the two businesses couldn’t agree on the integration percentage and other terms.
Nissan said in a statement that the two businesses “are in the stage of advancing various discussions, including the contents of the report,” but that it had not made any official announcements.
Nissan shares tumble after Honda merger talks reportedly end.
Credit: CTV News
“We plan to establish a direction and make an announcement around mid-February.”
Shares of the company fell 4.8 per cent before trading was paused by the Tokyo Stock Exchange, which stated that the media reports about the cancellation of the merger needed to be confirmed.
Honda, on the other hand, closed 8.2 per cent higher after rising almost 12 per cent.
In an apparent attempt to catch up to Chinese electric vehicle companies and Tesla, Nissan and Honda decided in December to begin negotiations aimed at forming the third-largest carmaker in the world.
At the time, Honda’s CEO emphasised that it was not a rescue for Nissan, which last year announced thousands of job losses following a 93% decline in first-half net earnings.
Foreign brands have found it difficult to do business in China, where BYD and other electric vehicle makers are setting the standard as demand for cleaner cars rises.
Last year, China surpassed Japan as the largest exporter of automobiles, aided by government incentives for electric vehicles.
After Toyota, Honda and Nissan are the second and third-largest automakers in Japan, respectively.
They had previously decided to investigate collaboration on EV software and components, among other technologies, last year; Mitsubishi Motors joined the effort in August.
However, the CEO of the smaller carmaker stated this week that it would decide in mid-February or later whether to participate in the Honda-Nissan merger negotiations.
Foxconn, a giant in Taiwanese electronics, reportedly made an unsuccessful attempt to buy a majority stake in Nissan in December.
Following that, it allegedly requested that Renault sell its 35% holding in Nissan; however, this activity was halted before the announcement of the merger negotiations.
Nissan has endured a difficult ten years, which included the arrest of Carlos Ghosn in 2018, the former CEO who subsequently ran away from Japan hiding in a music equipment box after evading bail.
Over the following two years, the company’s billions of dollars in debt are expected to mature.
