Nissan Seeks a Merger of Equals with Honda or No Agreement

      The much-anticipated merger discussions between Honda and Nissan are said to be on the verge of failing. The two Japanese competitors had envisioned becoming the world's third-largest automaker through collaboration, but a recent report indicates that Nissan plans to halt negotiations after discovering that Honda is more inclined towards a full takeover rather than an equitable partnership.

      According to unnamed sources cited by Reuters, "growing differences on both sides" have complicated the discussions, with some differences potentially insurmountable. One source noted that a significant point of disagreement is the vision each automaker has for the partnership. Honda reportedly suggested that Nissan become a subsidiary, which was considered "a departure from the original spirit" of the talks and ignited significant concern in Yokohama.

      Nissan's board members are expected to convene "in the near future" to determine whether to proceed with the negotiations, as reported by Reuters. If not Honda, they may need to consider other options.

      Nissan finds itself in a difficult situation; it is facing declining sales in critical markets and is deeply in debt, with its challenges likely to worsen due to potential tariffs threatened by the Trump administration on goods manufactured in Mexico. Should Nissan walk away from a deal with Honda, it could provide Foxconn an opportunity to attempt another hostile takeover, as had been reported last year. This time, Nissan may not have a more appealing offer to deter the Taiwanese tech company.

      On the other hand, Honda boasts a market value nearly five times that of Nissan, which might explain its willingness to assert itself during negotiations. Although Nissan claims to have a revitalization strategy, sources indicate that Honda has concerns regarding its execution.

      Unsurprisingly, Honda's shares rose by 8% on the Tokyo Stock Exchange by the end of trading Wednesday, while Nissan's shares fell by 4%.

      Neither company has officially commented on the report or the status of the merger talks, but they previously stated they would provide an update in mid-February. It raises the question of whether Mitsubishi, which seemingly exited negotiations, received a similarly undesirable offer to that of Nissan.

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