Nissan to step back from Honda merger after board votes against $58 billion tie-up: Report | Stock Market News

Honda-Nissan merger: Nissan will likely set to step back from merger talks with rival Honda, calling into question a $60 billion tie-up to create the world’s third-biggest automaker. According to news agency Reuters, the collapse of the merger could potentially leave Nissan to drive its turnaround alone. Reportedly, talks between the two Japanese automakers have been complicated by growing differences.

According to an earlier report by Reuters, Nissan could call off talks after Honda sounded it out about becoming a subsidiary. Honda, whose market value of about 7.92 trillion yen or $51.90 billion is more than five times bigger than Nissan’s at 1.44 trillion yen, was increasingly worried about its smaller rival’s progress on the turnaround plan.

Nissan shares slid more than 4% on the Tokyo Stock Exchange, which temporarily suspended trading in the stock after a Nikkei business daily report that the automaker would pull out of talks. Honda shares rose more than 8%, a sign of apparent investor relief.

Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalise a future direction by mid-February.

Nissan’s long-term alliance partner, French carmaker Renault would “vigorously” defend the interests of the group and its stakeholders, a spokesperson for the group said, adding that recent press information indicated no decision had yet been made on the possible end of the talks.

Renault, which owns 36% of Nissan, including 18.7% through a French trust, has previously said it would be open in principle to the merger.

The prospect of the merger being scuppered raises questions about how hard-hit Nissan, which is in the middle of a turnaround plan and aims to cut 9,000 employees and 20% of global capacity, can ride out its latest crisis without external help.

Honda is Japan’s second-largest car maker behind Toyota , and Nissan is the third-largest. The two said in December they were in talks to create the world’s third-largest automaker by sales, a move that would allow them to bulk up in an industry facing a huge threat from China’s BYD and other electric vehicle entrants.

The talks have also coincided with disruption posed by potential tariffs from U.S. President Donald Trump.

“Investors may get concerned about Nissan’s future (and) turnaround,” said Morningstar analyst Vincent Sun, adding: “Nissan also has a larger risk exposure to U.S.-Mexico tariffs than Honda and Toyota”.

Nissan has been hit harder than some rivals by the shift to EVs, having never fully recovered after years of crisis sparked by the 2018 arrest and removal of former chairman Carlos Ghosn.

“The news saying that Nissan did not want to be a Honda subsidiary appears to highlight that control was a contentious issue,” said Christopher Richter, Japan autos analyst at brokerage CLSA.

“Without being able to have control, Honda appears to be walking away.”

Nissan and Honda had initially said they planned to decide the direction of the integration by the end of January, but that was later pushed back to mid-February.

Mitsubishi Motors Corp., which has reportedly decided against joining the alliance, said earlier this week it would make a final decision once Honda and Nissan reach an agreement later this month. according to reuters