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A proposed $58bn merger to create the world’s fourth largest automaker appears on the snapping point after Honda made a shock proposal to show Nissan into a completely owned subsidiary, in keeping with three people accustomed to the matter.
The 2 rivals announced discussions on a mix in December, but just over 40 days later the talks have already soured, as Honda faces each shareholder and internal pressure to take full control of Nissan to show across the ailing automaker.
The newest proposal, delivered to Nissan on the weekend, deviates from initial plans to bring the 2 firms under a jointly owned holding company, in a structure that will have provided room to retain Nissan’s brand and decision-making powers.
Tensions emerged early within the negotiations because the rivals clashed over the equity ratio and valuation of their assets, in keeping with individuals with knowledge of the talks.
Nissan executives were greatly surprised by the fresh proposal — delivered as a “take it or leave it” offer — but the corporate has not finalised its response, the people said, adding that a board meeting could be held this afternoon.
One person near Nissan said they thought Honda’s sudden “aggressive” change of posture suggested it was searching for a technique to walk away from the merger talks.
Last week, France’s Renault had urged Nissan to barter the next premium on its stake from Honda to account for Honda taking control, pressuring its alliance partner not to pull out talks, out of concern it needed to concentrate on reviving its business.
Nissan had originally pitched the deal as “a merger of equals” to persuade factions contained in the group to integrate with Honda, but people near Renault said it was essentially Honda taking control of its Japanese partner.
Nissan’s weak financial performance has led to its market capitalisation collapsing to a fifth of Honda’s, skewing the balance of power in negotiations.
The talks were also triggered after Taiwanese iPhone contract manufacturer Foxconn approached Renault about acquiring a part of its 36 per cent stake in Nissan late last 12 months. Renault had been offloading its shareholding in Nissan following a restructuring of their 25-year alliance in 2023.
Shares in Nissan surged 7 per cent and people in Honda were also up 3.5 per cent, following Japanese media first reporting the brand new proposal.
Throughout the press conference unveiling an early-stage agreement for merger talks, Honda chief executive Toshihiro Mibe said the holding company structure was needed to guard each brands, although Honda would initially take the lead.
He warned multiple times that the merger would only proceed if Nissan successfully executed a turnaround plan that involved cutting production capability by 20 per cent and shedding 9,000 jobs.
Honda and Nissan said in statements on Wednesday that that they had originally planned to finalise and announce the direction of the management integration by the top of January but that plan has been pushed back to mid-February.
