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A proposed $58bn merger to create the world’s fourth largest automaker appears on the verge of collapse after Honda made a shock proposal to turn Nissan into a fully owned subsidiary, according to three people familiar with the matter.
The two rivals announced discussions on a combination in December, but just over 40 days later the talks have already soured, as Honda faces both shareholder and internal pressure to take full control of Nissan to turn around the ailing automaker.
The latest proposal, delivered to Nissan at the weekend, deviates from initial plans to bring the two companies under a jointly owned holding company, in a structure that would have provided room to retain Nissan’s brand and decision-making powers.
Tensions emerged early in the negotiations as the rivals clashed over the equity ratio and valuation of their assets, according to people with knowledge of the talks.
Nissan executives were taken aback by the fresh proposal — delivered as a “take it or leave it” offer — but the company has not finalised its response, the people said, adding that a board meeting would be held this afternoon.
One person close to Nissan said they thought Honda’s sudden “aggressive” change of posture suggested it was looking for a way to walk away from the merger talks.
Last week, France’s Renault had urged Nissan to negotiate a higher premium on its stake from Honda to account for Honda taking control, pressuring its alliance partner not to drag out talks, out of concern it needed to focus on reviving its business.
Nissan had originally pitched the deal as “a merger of equals” to convince factions inside the group to integrate with Honda, but people close to Renault said it was essentially Honda taking control of its Japanese partner.
Nissan’s weak financial performance has led to its market capitalisation collapsing to a fifth of Honda’s, skewing the balance of power in negotiations.
The talks were also triggered after Taiwanese iPhone contract manufacturer Foxconn approached Renault about acquiring part of its 36 per cent stake in Nissan late last year. Renault had been offloading its shareholding in Nissan following a restructuring of their 25-year alliance in 2023.
Shares in Nissan surged 7 per cent and those in Honda were also up 3.5 per cent, following Japanese media first reporting the new proposal.
During the press conference unveiling an early-stage agreement for merger talks, Honda chief executive Toshihiro Mibe said the holding company structure was needed to protect both brands, even though Honda would initially take the lead.
He warned multiple times that the merger would only proceed if Nissan successfully executed a turnaround plan that involved cutting production capacity by 20 per cent and shedding 9,000 jobs.
Honda and Nissan said in statements on Wednesday that they had originally planned to finalise and announce the direction of the management integration by the end of January but that plan has been pushed back to mid-February.
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