Nissan and Honda have ended discussions on a potential $60 billion merger, the companies said on Thursday, but they plan to continue collaborating on electric vehicle (EV) technology.
The talks had been complicated by differing visions for the deal, with sources saying Honda had proposed making Nissan a subsidiary. The two companies had explored a partnership to strengthen their position against growing competition from Chinese EV manufacturers.
See also: Nissan Explores New Partnerships, Including Foxconn, After Ending Talks with Honda
“Honda is pretty confident and has a lot in their favor, whereas Nissan is in a bad place. They don’t have a dance partner right now,” said Christopher Richter, a Japan autos analyst at brokerage CLSA. “They probably need to think about doing something different.”
The proposed merger would have created the world’s fourth-largest automaker by sales, behind Toyota, Volkswagen, and Hyundai. Nissan’s junior alliance partner, Mitsubishi Motors, was also part of the discussions but confirmed its withdrawal on Thursday.
“Going forward, the three companies will collaborate within the framework of a strategic partnership aimed at the era of intelligence and electrified vehicles,” the companies said in a joint statement.
See also: Foxconn Chairman Clarifies Intent to Cooperate with Nissan, Not Acquire
The decision comes as Japanese automakers face increasing competition from Chinese EV makers such as BYD and the possibility of tariffs in key markets like the United States. Nissan is pursuing a restructuring plan announced in November, which includes cutting 9,000 jobs and reducing global capacity by 20%.
Sources said in December that Nissan may need to further scale down its operations in China, where it runs eight factories through a joint venture with Dongfeng Motor. The company has already halted production at its Changzhou plant as part of its operational review.
Before announcing merger discussions in December, Nissan and Honda had been in talks on a technology collaboration, which could still move forward. Nissan is also open to new partnerships, with Taiwan’s Foxconn being one potential candidate, sources said.
See also: Foxconn Chairman Clarifies Intent to Cooperate with Nissan, Not Acquire
Foxconn Chairman Young Liu said on Wednesday that while the company would consider taking a stake in Nissan, its primary focus would be cooperation.
Following initial reports of merger discussions in December, Nissan shares had surged over 60% and Honda’s by around 26%. However, those gains have since moderated, with Nissan’s stock up 21% and Honda’s up 11% compared to pre-merger talk levels.
Nissan’s market capitalization is now nearly five times smaller than Honda’s, which stands at approximately 7.5 trillion yen ($48.6 billion). A decade ago, both companies had a market value of about 4.6 trillion yen.
See also: Honda Adopts Bühler Megacasting Technology for U.S. EV Production
Source: Reuters