Nissan Shares Surge 23% After Reports Of Merger Talks With Honda

Topline

Nissan Motor’s shares surged sharply on Wednesday morning after reports emerged that the company had initiated talks for a merger with fellow Japanese carmaker Honda, in a move that intended to help Nissan wade through an ongoing crisis and reportedly allow the Japanese companies to compete better against electric vehicle rivals from China and Tesla.

Key Facts

According to Nikkei Asia, which first reported the merger talks, the two automakers are discussing the possibility of operating under a single holding company that would allow them to pool their resources to take on emerging rivals.

The report said the size of each of the two automakers’ stakes in the new holding company and other financial details of the merger are yet to be decided.

The merged entity also plans to eventually bring Mitsubishi Motors—whose top shareholder is Nissan—on board, the report added.

In a Tokyo Stock Exchange filing, Nissan said it is considering “various ways of future collaboration” with Honda and Mitsubishi as part of a strategic partnership that was announced earlier this year, “including some matters reported in the press…but nothing has been finalized at this time.”

Honda also issued a similar statement in a regulatory filing, noting that the media reports are not based on any official announcements from the company.

How The Market Reacted To The Honda-Nissan Merger Reports?

The price of Nissan’s shares surged 23.70% to JPY 417.6 ($2.72) in Wednesday morning trading in Tokyo, prompting a pause in trading as it hit the upper limit for a single-day swing. Mitsubishi Motor Corp’s stock price surged 19.65% to JPY 487 ($3.17) after the news was reported. The shares of Honda Motors—the biggest of the three companies—went up initially, but eventually slipped to JPY 1,233 ($8.04), down nearly 4% from the previous day. The stock of Japan’s biggest automaker Toyota—which will continue to hold that crown even if this merger goes through—rose nearly 2% to JPY 2,725 ($17.76).

Big Number

Around 4 million. That is the combined number of vehicles Honda, Nissan and Mitsubishi sold globally in the first half of 2024, according to Bloomberg. This is lower that the 5.2 million sold by Toyota—the world’s biggest car marker—in the same period.

Further Reading

Honda and Nissan to begin merger talks amid EV competition (Nikkei Asia)