Nissan-Honda merger deal is off, says Nikkei

TOKYO: Nissan Motor Co. is pulling out of its deal with Honda Motor Co. to combine both brands and regain global competitiveness, the Nikkei newspaper reported today.

The pair had been negotiating the terms of a tie-up under which Honda would offer Nissan a lifeline by absorbing its struggling rival, and bring the two brands under a single holding company in 2026.

The two competitors failed to reach a consensus after seven short but tumultuous weeks of talks, according to the newspaper, which cited people it didn’t identify, bringing to a swift end what could have been a historic partnership for Japan’s auto industry.

The Tokyo Stock Exchange suspended trading of Nissan’s shares in response to the report. Honda’s shares rose as much as 12%, while Nissan fell as much as 6.4%.

Spokespeople for both companies said the report wasn’t based on announcements from either, and that a framework for ongoing negotiations will be announced as planned, albeit delayed once already, in mid-February.

Friction emerged between the two this week after media reports said Honda floated the idea of a complete acquisition, a proposal that was met with strong opposition within Nissan.

From the moment initial reports of a so-called merger surfaced in December, it was clear that Honda, with more than quadruple the market value, had the upper hand. When the two announced the deal in December, Honda made it apparent that Nissan had to implement a restructuring plan in order for any transaction to materialise.

An outdated product lineup, bloated dealership incentives and shaky leadership are just a few of the chronic issues ailing Nissan.

Without Honda’s backing, it’s unclear how the brand plans to turn itself around.

The full picture of Nissan’s plight became clear in November, after a 94% drop in first-half net sales forced it to cut thousands of jobs, slash production capacity and lower its annual profit forecast by 70%.

Then, weeks later, Honda unveiled plans to rescue Nissan by combining forces to regain lost ground in the US, where the popularity of gas-electric hybrids has given the edge to Toyota Motor Corp., and in China, where wave after wave of electric vehicles has forced foreign brands to turn tail.

Nissan is 36% owned by French carmaker Renault SA, which in late January sent representatives to Japan to express concern over the transaction and seek a premium for its stake, people familiar with the matter said.

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.