Nissan is set to withdraw from merger talks with Honda and is now exploring alternative partnership opportunities, a source reported on Thursday.
The talks reportedly collapsed after Honda proposed making Nissan its subsidiary instead of moving forward with the originally planned integration under a new holding company, announced in December.
“The latest conditions put on the table by Honda are unacceptable for Nissan… It was almost an affront.”
Despite the breakdown, Nissan remains open to strategic alliances in the automotive or technology sectors.
However, the company must take a highly creative approach and carefully evaluate potential synergies before moving forward, the source added.
Exploring New Partners
Bloomberg reported on Thursday that Nissan is exploring potential partnerships with US-based technology firms, according to anonymous sources.
The abandoned Nissan-Honda merger was seen as an attempt to compete with Tesla and Chinese electric vehicle manufacturers.
In December, Honda’s CEO refuted claims that the deal was a bailout for Nissan, which had announced major job cuts last year after reporting a 93% decline in first-half net profit.
On Wednesday, Nissan stated that it would “establish a direction and make an announcement around mid-February,” following reports that it was stepping away from the Honda negotiations.
In December, reports indicated that Taiwanese electronics giant Foxconn had unsuccessfully attempted to acquire a majority stake in Nissan.
The company then reportedly approached Renault, seeking to buy its 35% stake in Nissan—a move that was put on hold before merger discussions with Honda began.
According to the source, Nissan’s board of directors formally decided to terminate talks with Honda during a meeting on Tuesday.
Meanwhile, Japanese news agency Kyodo reported that Nissan CEO Makoto Uchida met with Honda’s chief, Toshihiro Mibe, in Tokyo on Thursday to convey the company’s decision to withdraw from the merger.
Nissan’s Ongoing Challenges
Nissan has endured a turbulent decade, including the high-profile 2018 arrest of former chairman Carlos Ghosn, who later fled Japan while out on bail.
The company is also burdened with billions of dollars in debt, set to mature over the next two years.
“I think Honda didn’t want (the merger) any more, so they proposed something that was unacceptable,” the source said.
“Nissan’s need for a strong partner remains, but its negotiating position is impaired by its weak profit outlook and stock price.”
Market analysts at CreditSights noted that while Nissan still requires a strong partner, its weakened profitability and declining stock price have eroded its negotiating power.
They also pointed out that ongoing uncertainty surrounding the company’s turnaround efforts continues to dampen its short-term financial outlook.
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