Nissan Stock Soars Amidst Reports of Potential Honda Merger Talks Resumption
Tokyo, Japan – Nissan’s stock surged by nearly 6% on Tuesday, buoyed by media reports suggesting that Honda is conditionally willing to re-enter merger negotiations with the beleaguered Japanese automaker.
Nissan, grappling with massive debt and plummeting operating profits, had initiated discussions with its healthier rival Honda in late 2024, envisioning a potential merger that could create the world’s third-largest automaker by 2026. However, Honda and Nissan, Japan’s second and third-largest automakers after Toyota respectively, officially terminated talks last week, with Honda, being in a stronger negotiating position, seeking to turn Nissan into a mere subsidiary, a proposition fiercely resisted by Nissan.
Nonetheless, the Financial Times (FT) reported on Tuesday, citing sources familiar with the matter, that Honda is open to reviving negotiations if Nissan’s CEO, Makoto Uchida, steps down in favor of a new CEO who can "better manage internal opposition" to the merger plan. Contacted by AFP, neither Nissan nor Honda provided any comment.
The prospect of a possible resumption of talks, a lifeline for the financially vulnerable Nissan, sent shockwaves of positivity through the market. At 05:30 GMT, Nissan’s stock had jumped by 4.05% to 441.2 yen on the Tokyo Stock Exchange, outperforming the overall market, which gained 0.51%. The stock had soared by as much as 5.8% earlier in the day. Mitsubishi Motors, another Japanese automaker initially involved in the merger talks, experienced an even more pronounced surge, with its shares climbing by 7.75%.
"Relations between Makoto Uchida and his counterpart at Honda, Toshihiro Mibe, have deteriorated, with Honda frustrated by the slow pace of Nissan’s restructuring and the depth of its financial problems," the FT explains. Under pressure, Nissan announced in November plans to eliminate 9,000 jobs worldwide and reduce its production capacity by 20%. However, Honda insisted that it was not interested in bailing out its partner, demanding prior implementation of significant structural transformations.
According to the FT, Uchida is "facing pressure from Nissan’s board and its partner Renault to leave in the coming months after the debacle of the Honda talks," with Nissan directors reportedly "holding informal discussions about the timing of his departure." The French automaker Renault holds a 35% stake in Nissan and is eager to protect the value of its investment, despite its efforts to unwind its involvement.
Nissan reported an unexpected quarterly loss for the October-December period, driven by a decline in sales in China. The weakened automaker continues to seek alliances and partnerships. Taiwanese electronics assembly giant Foxconn (Hon Hai), a major supplier to Apple, has expressed interest in acquiring Renault’s stake in Nissan.
