Wednesday 25 Dec
Japanese automotive giants Honda and Nissan announced on Monday their intention to merge under a new holding company. The merger, which is subject to detailed negotiations over the next six months, is expected to also include Mitsubishi Motors as part of the alliance.
In a joint statement, the three companies revealed that if negotiations are successful, the merger could be finalized by 2026. The proposed investment is estimated at around $50 billion, positioning the combined entity as the world's third-largest automaker, trailing only Toyota and Volkswagen.
The primary goal of the merger is
to enhance global competitiveness in the face of rapid industry shifts,
particularly in electric vehicles and autonomous driving. By combining their
strengths, the three companies aim to deliver more attractive products and services
to customers worldwide, including advanced technologies and improved cost
efficiencies.
The announcement comes after
Nissan faced a challenging period marked by job cuts and production capacity
reductions. Following reports of merger talks with Honda, Nissan's stock price
surged by more than 20%, reflecting investor optimism about the potential
benefits of the deal. Notably, the three companies had already announced a
partnership in August to develop electric vehicles and software.
At a joint press conference in
Tokyo, Honda and Nissan signed a memorandum of understanding to initiate merger
discussions. A special committee will be formed to delve into the specifics of
the new partnership. Mitsubishi has also signed a memorandum of understanding
and will make a final decision on its participation by the end of January 2025.
A definitive agreement is
expected to be reached by June 2025. Honda's CEO, Toshihiro Mibe, emphasized
that this announcement represents the beginning of merger discussions and
acknowledged that there is a possibility that the deal may not proceed as
planned..
According to the Associated Press, Honda is likely to lead the new management initially, while preserving the "principles of each company." The new parent company is expected to be formed through a share swap, with the exact ratio yet to be determined. If approved by shareholders, the new entity is anticipated to be listed on the Tokyo Stock Exchange in August 2026.
