Report: Nissan Cancels Honda Merger

Nissan is reportedly set to withdraw from merger discussions with Honda, according to sources familiar with the matter.

The decision would bring an end to negotiations that could have led to a $60 billion tie-up, creating the world’s third-largest automaker. The collapse of merger talks raises new concerns about Nissan’s future without external support. Reuters reports differences between the two companies appear to have widened in recent weeks, with one key sticking point being control.

Honda had proposed making Nissan a subsidiary, a departure from the original "merger of equals" held under a jointly owned holding company. Nissan opposed the idea, which played a role in the discussions breaking down.

Both automakers have stated that they have not formally announced any decision and will finalize their direction by mid-February.

News of the breakdown temporarily halting trading of Nissan’s stock on the Tokyo Stock Exchange—in contrast Honda shares surged, indicating investor relief. Nissan has struggled more than some rivals in adapting to industry changes, still dealing with the fallout from the arrest and removal of former chairman Carlos Ghosn in 2018.

The company is in the midst of a cost-cutting strategy that includes eliminating 9,000 jobs and reducing global production capacity by 20%. Honda, whose market value is significantly higher than Nissan’s, has reportedly grown more skeptical of its rival’s ability to triple its profits, a key condition of the proposed merger.

Potential U.S.-Mexico tariffs have also added complexity to Nissan’s position. Nissan has greater exposure to trade risks than Honda and Toyota.

The situation also brings Nissan’s long-standing partnership with Renault into focus. Renault, which owns a 36% stake in Nissan, had indicated it would be open to the merger in principle. It's unclear what Renault will choose to do with its stake in Nissan, but it was reported last month that Foxconn was still interested in purchasing Renault's stake in Nissan as it eyes up Nissan's production capacity for its expansion into electric vehicles.

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