Honda, Nissan transferring nearer collectively as competitors heats up, supply says By Reuters

By Maki Shiraki

TOKYO (Reuters) – Honda (NYSE:) and Nissan (OTC:) are transferring towards a better merger by discussing the creation of a holding firm, a supply mentioned, the clearest signal but of a reorganization of the auto business Japanese in response to the immense challenges posed by Tesla. (NASDAQ:) and its Chinese language rivals.

The talks, first reported by the newspaper, would enable automakers to cooperate extra carefully on know-how and assist Japan’s No. 2 and No. 3 automakers create a extra formidable home rival than Japan’s. Toyota (NYSE:).

Negotiations between Honda and Nissan are aimed toward making a holding firm, mentioned the supply, who requested anonymity as a result of the data has not been made public.

It was not instantly clear whether or not a brand new holding firm was supposed to ultimately set up a full union between the 2 corporations, though Nikkei mentioned they had been starting merger talks.

Nissan shares jumped greater than 21% in Tokyo, whereas Honda shares fell 1.6%.

Honda’s market cap is about $44 billion, whereas Nissan’s is about $10 billion after Wednesday’s value surge, that means a full merger could be bigger than the deal large of 52 billion {dollars} between Decree (BIT:) Chrysler and PSA in 2021 to create Stellantis (NYSE:).

Honda and Nissan are additionally contemplating integrating Mitsubishi Motors (OTC:), of which Nissan is the biggest shareholder with a 24% stake, into the holding firm, the Nikkei report mentioned.

Honda and Nissan have strengthened ties in current months as they grapple with the altering electrical automobile panorama. Along with sturdy competitors, automakers additionally face stagnant demand in Europe and america, growing stress on them.

Honda and Nissan issued an identical statements Tuesday saying no merger had been introduced by both firm.

“As introduced in March this yr, Honda and Nissan are exploring varied alternatives for future collaboration, leveraging one another’s strengths,” the businesses mentioned of their separate statements, including that they might notify stakeholders of any updates. in a well timed method.

French automotive producer Renault (EPA:), a significant Nissan shareholder, mentioned it had no info and declined to remark.

Over the previous yr, the electrical automobile value conflict launched by Tesla and Chinese language automaker BYD (SZ:) has intensified stress on all corporations dropping cash on next-generation autos. This has pushed corporations like Honda and Nissan to search for methods to chop prices and pace up automobile improvement, and mergers are a significant step in that path.