Nissan and Honda shares rise on potential merger talk cancelation

Shares of Honda and Nissan rose Wednesday after a local newspaper reported that the Japanese automakers were considering calling off their merger talks.

The boards of both companies are meeting soon to table the termination of the merger, Asahi Shimbun reported, citing sources.

Shares of Nissan rose as much as 7.4%, while Honda climbed as high as 4.2%.

The talks were not going as expected by Honda, which had proposed making Nissan a subsidiary — an idea that the latter was opposed to, the report said.

Both the companies had announced official negotiations to merge last December, and discussions were set to conclude in June this year. The blockbuster merger would have catapulted them to the world’s third-largest carmaker by sales.

Nissan’s strategic partner Mitsubishi was also invited to participate in the planned merger, a decision that Mitsubishi was reportedly slated to make in mid-February or later. 

Analysts had previously said that the merger was proposed as a result of Nissan’s financial difficulties and the restructuring of its long-established alliance with France’s Renault. In its second-quarter report, Nissan revealed intentions to slash 9,000 jobs and decrease its global production capacity by 20%.

A transformation in the global auto industry, driven by the advent of electric vehicles, has been disruptive to traditional automakers.

Nissan particularly has been challenged in its largest market, the U.S., as well as in China and other emerging markets. The automaker’s operating profits fell by 90%, and net income declined by 94% in the first half of fiscal year 2024, compared to the same period last year.

Nissan and Honda did not immediately respond to CNBC’s requests for comments. 

Here’s the full Asahi Shimbun report.