Honda and Nissan begin merger talks
Posted on Dec 23, 2024 / Finance
Honda and Nissan announced on December 23 that they had begun merger talks. If they merge, it will become world's third-largest automaker.
A statement on Nissan's website said the parties "signed a memorandum of understanding to begin discussions and explore the possibility of integrating the two companies' businesses by establishing a joint holding company."Honda and Nissan also signed a separate memorandum with another Japanese automaker, Mitsubishi Motors, to explore the possibility of that company joining the group. Nissan is Mitsubishi's majority shareholder.
"The emergence of Chinese automakers and new players has greatly changed the auto industry. We must build up our capabilities to compete with them by 2030, or we will be defeated," Honda CEO Toshihiro Mibe said at a press conference in Tokyo (quoted by Reuters).
According to representatives of Honda and Nissan, the merger would result in combined sales of 30 trillion yen ($191 billion) and profits of more than three trillion yen ($19 billion).
The parties plan to complete negotiations by June 2025 and establish a holding company by August 2026. The majority of seats on the board of directors of the combined company are expected to be occupied by representatives of Honda.
Sources told Reuters that Renault, Nissan’s largest shareholder, is open to the deal and will study all the implications of the merger. Amid reports of a possible merger, Honda shares rose 3.8%, Nissan — 1.6%, and Mitsubishi Motors — 5.3%.
A merger would make Honda and Nissan the third-largest automaker in the world after Japan’s Toyota and Germany’s Volkswagen. Currently, the third place is occupied by the South Korean Hyundai and Kia Group. The merger of Japanese companies will be the largest in the auto industry since 2021, when Fiat Chrysler Automobiles and PSA merged to create Stellantis.
Nissan announced in November 2024 that it would cut 9,000 jobs and reduce its production capacity by 20% due to falling sales in key markets, China and the United States. Honda reported lower-than-expected revenue due to lower sales in China.
Nissan has been in crisis since then-CEO Carlos Ghosn was arrested in 2018 for financial violations (Ghosn fled Japan after his arrest). Taiwanese company Foxconn made an offer to buy Nissan in 2024, but the Japanese automaker rejected it, Reuters reported, citing sources.
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