Honda, Nissan combination increasingly unlikely, says JPMorgan

JPMorgan analyst Evan Piascik finds it increasingly unlikely that a combination of Nissan (NSANY) and Honda (HMC) will materialize. News reports indicate tension in the merger discussions, including Renault reportedly asking for a greater premium for its equity interest in Nissan, Nissan’s opposition to Honda’s proposal to make Nissan a subsidiary, Honda and Nissan delaying the formal announcement of the merger from the end of January to mid-February, and Honda calling for more drastic cost reduction measures at Nissan to ensure a turnaround, the analyst tells investors in a research note. JPMorgan is cautious on Nissan’s outlook on a standalone basis, citing its recent operational challenges in North America and China “despite a generally strong automotive industry environment.” Honda’s standalone outlook is more stable, contends the firm.