Nissan (7201.T) and Honda (7267.T) have ended merger talks and plans to create a $60 billion automotive company, thus putting an end to speculations regarding a massive deal that would have created the third-largest car manufacturer in the world by sales volume. However, this announcement does not signify the end of cooperation between the two companies, as they announced the signing of a broad strategic partnership agreement.
Although the companies did not disclose the main reasons for the merger's failure, some media reports indicated disagreements over the structure of the new company. Honda insisted that the resulting company be fully under its control, while Nissan preferred a more balanced structure. Reports also indicated that some officials at Nissan were concerned about losing the identity and independence of the company in the event of a merger.
Strategic Partnership Instead of merging, Honda and Nissan opted for another path of collaboration, which is the strategic partnership. Under this agreement, the two companies will collaborate in several areas, including the development of electric vehicle technology, autonomous driving, and the exchange of expertise in manufacturing, marketing, and distribution.
Both Honda and Nissan are expected to focus on executing this strategic partnership and enhancing their capabilities in the fields of electric vehicles and autonomous driving, which are both rapidly growing areas in the global automotive industry.
In trading news... Nissan's shares rose by more than 60%, while Honda's shares jumped around 26% in late December after news of the merger talks was first reported on December 17. However, those gains have since shrunk to 21% for Nissan and 11% for Honda. After the announcement of the talks being terminated, Honda's shares increased by 2.14%, while Nissan's shares declined by 0.34%.
