Honda and Nissan give up negotiations for a merger – Observer

Japanese car manufacturers Honda and Nissan announced Thursday that they will abandon negotiations for a merger of the three companies.

Car manufacturers stated in a joint statement that they agreed to cancel an agreement which allowed negotiations on the structure of a possible joint company.

After discussions, “the two groups concluded that, to give priority to the speed of decision making and its execution in an increasingly volatile market environment (…), it would be more appropriate to end negotiations and terminate the memorandum of understanding“.

Honda Motor and Nissan Motor announced at the end of December that they would maintain negotiations on a merger. Mitsubishi Motors said after it was considering joining the future group.

Japanese Honda and Nissan will unite and form third largest car manufacturer in the world

From the beginning, the effort has left analysts intrigued as to the advantages for any of the companies, as their lines of models overlap.

Last week, the Nikkei Economic Journal had advanced that Nissan decided to withdraw from the talks he had had with Honda since December for a merger due to divergences about the shareholder structure of a joint company.

The main obstacle was Honda’s proposal to transform Nissan into an integral subsidiary Within the joint structure, which the latter immediately rejected.

“There were several options regarding the structure of business integration. Honda proposed to change the structure [projetada]moving from a joint holding (…) to a structure where Honda would be the mother company and Nissan the subsidiary through an exchange of actions, ”said the joint statement released Thursday.

According to local media, Honda was also unhappy with the progress of Nissan’s restructuring plan to overcome the company’s financial difficulties, which includes a 20% reduction in its global production and the cut of nine thousand jobs.

After Toyota Motor, Honda is the second largest Japanese car builder in sales volume and Nissan is the third.

The merger project, which was scheduled for 2026, would have created the third largest car builder in the world.