Honda and Nissan Announce Merger Talks, Shares of Japanese Automaker Soar
A sign marks the location of a Honda dealership in Libertyville, Illinois, on December 18, 2024. (Scott Olson/Getty Images)
Japanese automaker Honda is set to buy back up to 1.1 trillion yen ($7 billion) of its shares amid merger talks with Nissan. Shares of Honda are on track for their best day in 16 years, with a 15.51% gain as of Monday. The deal would create the world’s third-largest carmaker by sales.
The merger discussions between Honda and Nissan, which began in October, are focused on sharing knowledge and resources, achieving economies of scale, and creating synergies. The companies plan to establish a holding company as the parent organization and list it on the Tokyo Stock Exchange.
The potential merger is seen as a response to Nissan’s financial struggles and the restructuring of its long-standing partnership with France’s Renault. In its latest quarterly report, Nissan announced plans to cut 9,000 jobs and reduce its global production capacity by 20%.
Honda reported operating profits of 1.382 trillion yen for the full year to March 2024, while Nissan reported 568.7 billion yen. The combined value of the two companies would be nearly $54 billion, with Honda’s market capitalization contributing the larger $43 billion share.
Analysts suggest that the new management will face the challenge of differentiating the product range and extending the business. The merger deal is expected to conclude in June 2025, with Nissan’s strategic partner Mitsubishi given the opportunity to join the new group by the end of January 2025.