Honda and Nissan May Announce a Deal to Merger Next Year

 

Honda $HMC and Nissan (OTC: NSANY) are likely to uncover a deal on Monday (Dec. 23) to form a joint holding company for a merger in response to growing challenges from Tesla (NASDAQ: TSLA) and Chinese rivals.

 

According to the sources, the Japanese automakers will hold a joint press conference after Monday's board meeting. Nissan's partner Mitsubishi Motors (OTC: MMTOF) is also on track to attend the conference. Honda and Nissan plan to conclude merger talks by June 2025 and form a holding company by August 2026. At that time, the holding company will be listed but Honda and Nissan will be delisted. Honda will appoint the majority of the holding company's board of directors and leader.

 

The root cause of the consolidation may be the sales shocks the two companies separately experienced. Last month, Nissan announced plans to lay off 9,000 workers and cut 20% of its global production capacity as sales in China and the U.S. plummeted. Honda also reported lower-than-expected earnings due to slumping sales in China.

 

Traditional automakers led by Honda and Nissan have lost market share in China, the world's biggest auto market, to BYD (SZ: 002594) and other electric and hybrid vehicles brands.

 

Honda is Japan's second-largest automaker, with a market capitalization of over $40 billion. The third-place Nissan has a market value of about $10 billion. Incorporating Mitsubishi Motors, their integration would overtake South Korea's Hyundai (OTC: HYMTF) and Kia, becoming the new third-ranked auto group after Toyota (NYSE: TM) and Volkswagen (ETR: VOWG_p). Such a consolidation will mark another reshaping of the global auto industry.

 

French automaker Renault (EPA: RENA), Nissan's biggest shareholder, is approachable to the deal in principle and will inspect all the influences of the merger, the sources said.

 

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