A merger between car companies Nissan (NSANY) and Honda (HMC) is certainly catching a lot of attention, and has been doing so for the last few days. But some are deeply concerned about what the merger deal would mean for Nissan itself, including former CEO Carlos Ghosn. Investors were much less concerned, though, as shares shot up over 7% in Christmas Eve trading.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Ghosn essentially points out what some figured all along: Nissan and Honda are two separate companies, and that means they both have people who do the same job. But Ghosn figures that it will be Nissan that pares back the redundancies as opposed to Honda. And this led to Ghosn pronouncing that a merger will produce “carnage” as Nissan cuts its costs massively, with “Honda…in the driver’s seat,” Ghosn noted. Ghosn called such a development “very sad.”
Ghosn, interestingly enough, currently lives in Lebanon as was arrested for financial crimes in Japan back in 2018, and fled trial, though he denies any misconduct, noted a CNBC report. Nissan and Honda have “practically no complementarity,” Ghosn declared, and thus any cost reductions or duplications would fall on the “minor partner,” and that would be Nissan.
So Why Merge These Two?
Ghosn, for his part, believed that a more complementary merger would have come from France’s Renault. But Indian Express had a whole list of reasons why Honda and Nissan would do well in a merger.
The first was economy of scale, as Honda / Nissan would become the third largest automaker on Earth, vital in this era of growing competition. That growing competitiveness—particularly out of China’s electric vehicle market—also proved a reason. Cost sharing was also a reason, and Nissan’s shaky books certainly gave Nissan a reason to sign up. And while there was not much complementary between Honda and Nissan, they certainly had synergy to share, the report noted.
Is Nissan Stock a Buy or Sell?
Turning to Wall Street, no analysts currently carry a rating on NSANY, so we turn to the last five days of trading instead. Shares are up 6.07% over the period so far, but that is mostly thanks to today’s events. Ahead of today’s unexpected upward burst, shares had been trending largely downward, though not by much.
