Due to differences in work cultures, leadership disputes, and financial complexity, mergers are frequently difficult. The Honda-Nissan merger, which hasn't proceeded as planned, is a pertinent example.
Despite the lack of official confirmation, rumors suggest that Nissan may abandon its merger negotiations with Honda, the second-largest carmaker in Japan based on volume.
Nissan opposed to subsidiary call
According to sources, Honda had suggested that Nissan operate as a subsidiary after the merger. Nissan, however, has objected to this action since it is inconsistent with the merger's initial objectives. According to sources, after deliberating on the issue, the Nissan board has decided to end the merger negotiations. But as of right now, no formal confirmation exists.
Nissan asked to purchase Renault’s Share
As previously stated, both brands were supposed to gain from the Honda-Nissan merger. It would have produced enhanced competencies that would have aided Nissan and Honda in improving their products and financial standing. Nissan was asked to purchase Renault's share of the business as part of the merger negotiations.
Nissan to face obstacles
Renault owns about 36% of Nissan. It comprises an 18.7% stake that is run through a French trust. Although Renault appears to have no objections to the Honda-Nissan combination, Nissan will face significant financial obstacles if it decides to buy out Renault's portion, which is estimated to be around Rs 31,457 crore. Given the fierce competition from EV producers like BYD, the stakes are high for both Honda and Nissan.
Impact on Stock Markets
A Nikkei Business Daily report discussing the halted merger talks sparked a reaction from the markets. At the Tokyo Stock Exchange, Nissan's stock dropped more than 4%. The stock was then suspended from trading. Honda's stock, by contrast, increased by almost 8%. Even stockholders don't seem to be all that thrilled with the plans for the Honda-Nissan merger.
The Nikkei article is unrelated to any formal declarations made by Honda or Nissan, according to their respective statements. Both companies promised that they would endeavor to make the merger successful, and that progress would probably be made by the middle of February. According to Renault's spokeswoman, the conclusion of merger negotiations has not been formally confirmed. At the moment, Nissan is implementing a turnaround strategy.
Nissan to reduce Workforce?
Nissan wants to cut its global capacity by 20% and its staff by about 9,000 workers. The Honda-Nissan merger negotiations are uncertain at a time when US tariffs are a real possibility. U.S.-Mexico tariffs would affect Nissan more severely than they would Honda and Toyota.
Conclusion
The idea of making Nissan operate as a subsidiary seems like it will be a difficult aspect of the merger negotiations. From Honda's point of view, it might be pertinent because the business must protect its interests. Additionally, according to sources, Mitsubishi, which had previously expressed interest in joining the merger, may not do so. To know more about their product catalog, check out the car news.
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