Tokyo, Japan – A potential merger between Honda Motor Co. and Nissan Motor Co., which could have created the world’s third-largest automotive group, is facing significant hurdles and may soon collapse. The deal, which was initially announced with the aim of creating a joint holding company, is now in jeopardy due to disagreements over key terms, primarily concerning the level of control each company would have.
Nissan Opposes Honda’s Takeover Proposal
According to a report, Honda, whose market capitalization stands at around five times that of Nissan, floated the idea that Nissan be merged as a subsidiary under its fold. The latest proposal was starkly different from the “merger of equals” concept it had first been floated as. Nissan top leaders have expressed disagreement with the suggestion. People with knowledge about the issue claim Nissan is not open to a low-influence situation in the collaboration.
It is tough to see how they will come to an agreement,” said Kohei Takahashi, an analyst at UBS Group AG. “If the deal fails, it would be a very serious issue for Nissan’s future.”
Nissan’s Financial Struggles and Restructuring Efforts
Nissan has struggled to find its footing since the arrest and ousting of former Chairman Carlos Ghosn in 2018, which left it with an outdated product lineup and excess production capacity. Nissan’s financial woes came to the fore in November when the company said first-half net income had plummeted 94%. Its current restructuring plan involves cutting 9,000 jobs and reducing production capacity by 20%.
“Further earnings deterioration is possible at Nissan,” said Citigroup Inc. analyst Arifumi Yoshida. “Additional restructuring measures are vital.”
Nissan is now reportedly seeking new partners, ideally from the technology sector and based in the U.S., to navigate the shift toward electrification and automation in the automotive industry. One potential candidate is Hon Hai Precision Industry Co., also known as Foxconn, which had previously put its interest in Nissan on hold during the merger discussions with Honda.
Honda, on the other hand, may be reconsidering the merger due to concerns about Nissan’s progress on its turnaround plan. The company had made the restructuring of Nissan’s operations a prerequisite for any transaction to materialize.
Both companies have confirmed that they are still in discussions and expect to make a formal announcement around mid-February. However, the prospect of a successful merger appears increasingly unlikely, leaving the future of both automakers uncertain.
What’s at Stake? The Impact of a Failed Merger
If the merger were to occur, the combined Nissan-Honda group would have become the third-largest carmaker in the world, behind Toyota and Volkswagen. Together, the companies produce nearly 10 million vehicles annually and have a strong presence in Japan, North America, and Europe. The deal was expected to help both automakers compete in the fast-changing electric vehicle (EV) market.
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The £48 Billion Honda-Nissan Merger Faces Collapse! What does this mean for the future of the auto industry? Will Nissan find a new partner, or will Honda take the lead?
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