Japanese car giants Honda and Nissan has confirmed that they have ended talks over a merger that would have brought together the two long-time rivals.
The two firms signed a memorandum of understanding (MOU) to investigate merging their operations in December last year, with the intention to agree a final deal by June 2025. Under the agreement, the two brands would have remained separate but adopted shared platforms and powertrains, and merged many of their production operations. It would have created one of the world's largest car companies.
Honda and Nissan also separately agreed to consider adding fellow Japanese manufacturer Mitsubishi Motors into the merger deal.
But the firms have now agreed to scrap both sets of merger talks. That follows reports in Japanese newspaper Nikkei that Nissan decided to withdraw from the deal amid growing differences between the two car makers on how the merger would work. They were said to have been angered by an unexpected proposal from Honda that moved away from the plan to form a joint holding company and would have effectively made Nissan a subsidiary fully owned by Honda.
That was effectively confirmed in a joint statement released by the two companies regarding the end of talks. It said: "During the discussions between the two companies, various options were considered regarding the structure of the business integration. Honda proposed changing the structure from establishing a joint holding company, where Honda would appoint the majority of directors and the chief executive officer based on a joint share transfer as initially outlined in the MOU, to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange."
It is understood Honda suggested that deal because of its higher market capitalisation, with the valuation of the two firms’ respective assets understood to have been a key sticking point throughout the talks. Honda has a market capitalisation of around £31 billion, while Nissan is valued at around £8bn, and that is believed to have prompted Honda to seek taking a leading role in the deal, rather than the proposed 'merger of equals'.
The two firms had previously agreed to collaborate on development in a number of areas, and in the joint statement they hinted that would continue – and could even be expanded.
They added that "both companies concluded that, to prioritise speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease discussions and terminate the MOU.
"Going forward, Nissan and Honda will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles, striving to create new value and maximise the corporate value of both companies."
Add your comment