Nissan Wants a Merger of Equals With Honda or No Deal

The much-hyped merger talks between Honda and Nissan are reportedly on the brink of collapse. The two Japanese rivals predicted that they could instantly form the world’s third-largest carmaker by joining forces, but a recent report claims that Nissan is planning to end the negotiations after learning that Honda is more interested in a full-on takeover than a friendly tie-up that places both companies on equal footing.

Citing anonymous insiders, Reuters wrote that “growing differences on both sides” have complicated the talks, and the differences may be too big to overcome. One of its sources said a major point of contention is how both automakers see the partnership. Honda allegedly asked Nissan to become a subsidiary, which was “a departure from the original spirit” of the discussions, and the idea set off a five-alarm panic in Yokohama.

Nissan’s board members will meet “in the near future” to decide whether to continue the talks, according to Reuters. But if it’s not Honda, it will likely have to be someone else.

Nissan is stuck between a rock and a hard place; its sales are falling in key markets and it’s in serious debt, and its problems will be compounded by the tariffs that the Trump administration has threatened to impose on Mexican-manufactured goods. Walking away from Honda could very well give Foxconn an opening to pursue a hostile takeover again, as was reported late last year. And this time, Nissan might not have a more attractive offer to hold off the Taiwanese tech giant.

As for Honda, it has a market value that’s nearly five times larger than Nissan’s, which might be why it was bold enough to reportedly flex its corporate muscles. And while Nissan claims it has a turnaround plan, sources say Honda has been worried about the progress being made on it.

Unsurprisingly, shares of Honda increased by 8% on the Tokyo Stock Exchange by the end of trading Wednesday, while Nissan’s slid by 4%.

Neither company has officially commented on the report or on how the merger talks are progressing, but they previously said they would provide an update in mid-February. We can’t help but wonder if Mitsubishi, which seemingly left the negotiations, received a similar offer to Nissan’s that it really didn’t like.

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