Mega-merger looks set to fail

Talks between Nissan and Honda to form a joint holding company are reportedly on the brink of collapse, with the former company instead seeking a new partner to ensure its survival.

The new ally for Nissan will ideally be from the technology sector and be based in the US, which remains its most important market, people familiar with the matter have told Bloomberg.

Nissan president Makoto Uchida is believed to have told Honda president Toshihiro Mibe of his company’s plans to call off merger talks during a meeting between the pair in Tokyo on February 6. 

The Japanese companies are set to make a formal announcement in mid-February about their efforts to form one of the world’s largest carmakers, which were first signposted in December.

Bloomberg reports that Honda had proposed acquiring Nissan and making it a wholly owned subsidiary but such a suggestion was met with strong opposition.

Honda had also reportedly made the restructuring of Nissan’s operations a prerequisite for any transaction. Yet, Nissan has done little in this space so far and isn’t planning on closing any factories.

With the merger talks looking set to fail, Nissan is facing a make-or-break 12 months and risks going under without much-need support, reports the Scottish Sun.

The firm has already cut 9,000 jobs worldwide, Uchida has taken a 50 per cent pay cut as part of an economy drive and it slashed its annual profit guidance by 70 per cent in November.

Sources have said Honda, with a market value nearly five times bigger than Nissan, is increasingly worried about the latter’s progress on a turnaround plan.

Nissan’s smaller alliance partner Mitsubishi Motors, which also signed the memorandum of understanding in December about a possible three-way merger, is set to announce its plans in the middle of this month.