The highly anticipated merger negotiations between Japanese carmakers Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY) are in turmoil as Honda reportedly proposed making Nissan a fully owned subsidiary. According to familiar sources, Honda is facing internal and shareholder pressure to fully take over Nissan to revive the company, which could lead Nissan to cancel the merger. Honda’s stock in Tokyo rose by over 8%, while Nissan’s stock fell nearly 5%, resulting in a trading suspension.
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Both companies are yet to make a formal statement but have suggested an announcement could come by mid-February.
Merger at Risk as Honda Proposes Full Takeover
Honda-Nissan’s merger discussions are now clouded with uncertainty following Honda’s unexpected U-turn. The latest proposal to Nissan diverges from the initial plan to create a jointly owned holding company, which would have preserved Nissan’s brand identity and decision-making autonomy. This unexpected shift in the offer took Nissan executives by surprise.
Moreover, tensions arose between the two companies during the early stages as well, when they disagreed on the equity distribution and the valuation of their respective assets.
Nissan, Honda Merge to Power Ahead in EV Race
Japanese automakers have recently been facing fierce competition in the EV (electric vehicle) space, dominated by China’s BYD Co. (BYDDF) and the U.S.-based Tesla (TSLA). As a result, Honda and Nissan are struggling to keep up with the rising popularity of affordable, software-driven EVs, despite having been strong players in key markets like China.
This merger would enable Honda and Nissan to combine their resources, positioning them to better address the transition to EVs and autonomous driving technology. Additionally, the merger will place the combined entity as the third-largest global automaker, behind Toyota (TM) and Volkswagen (VWAGY).
Honda or Nissan: Which Stock Offers More Upside?
We used the TipRanks Stock Comparison tool to assess the potential upside of Honda and Nissan stocks, based on analyst ratings. Honda’s Japan-listed stock holds a Moderate Buy rating with an expected growth rate of 13%. In contrast, Nissan stock carries a Strong Sell rating, with a projected growth rate of only 4%.
