Nissan may call off honda merger talks:
Japanese automaker nissan may call off its merger talks with rival honda, the Nikkei newspaper reported.
As a result, Nissan's shares fell more than 4% before the tokyo Stock Exchange promptly suspended trading after the article was released, news agency Reuters reported.
However, Honda's shares rose more than 8% in what looked like a sign of investor relief that the merger wouldn't go through.
If the merger had happened, the resulting company would have become the world's third-largest automaker. At the moment, honda is Japan's second-largest car maker, and nissan is its third-largest.
The merger was originally proposed to face an industry now threatened by China's BYD and other electric vehicle (EV) entrants.
Nissan had also seen troubled times. It never recovered so far from the debacle of the arrest and removal of former Chairman Carlos Ghosn in 2018. This was based on charges of misreporting his compensation.
As a result, nissan also lost its longtime partner, Renault.
Why may the Nissan-Honda merger be called off?
The merger talks fell through after honda, with a market value nearly five times bigger than nissan, proposed that nissan become a subsidiary, according to the report.
However, the original plan was to create a new holding company, and both nissan and honda were to be equal subsidiaries of it.
"The news saying that nissan did not want to be a honda subsidiary appears to highlight that control was a contentious issue," the report quoted christopher Richter, japan autos analyst at brokerage CLSA, as having said. "Without being able to have control, honda appears to be walking away."
Honda was increasingly worried about Nissan's progress on the turnaround plan.
Nissan and honda, however, said in separate statements that the Nikkei article was not based on information announced by the companies and that they are aiming to finalize a future direction by mid-February and announce it at that time, according to the report.
This also raises questions about how nissan can manage the crisis it's going through without external help. Its current turnaround plan includes laying off 20,000 employees and cutting 20% of global capacity.
Even US President Donald Trump's tariffs on mexico would hurt nissan more than honda or even Toyota.
However, Renault, which owns 36% of nissan, has said it's open to merging with honda and Mitsubishi Motors, which had also considered joining the merger.
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