Unexpected twist: Honda gives Nissan ultimatum on merger

Nissan shares rallied on Tuesday after a report said Honda would be willing to re-open takeover talks if CEO Makoto Uchida steps down.

Merger over…

The Japanese auto giants said last week they had scrapped plans to join forces, which had been seen as a way to catch up with Tesla and Chinese firms in electric vehicles.

ALSO READ: Officially no more: Honda and Nissan calls off planned merger

The merger talks apparently unravelled after Honda proposed to make its struggling rival a subsidiary instead of a plan announced in December to integrate under a new holding company.

Uchida told reporters Thursday that “we could not accept this proposal as we were not sure how much our autonomy would be kept and if Nissan’s potential would be maximised”.

or not…

However, Nissan jumped almost six percent at one point Tuesday after the Financial Times said Honda would be prepared to revive negotiations under a different Nissan boss. The gains were pared to close up 3.7%.

The FT, citing people close to the matter, said Uchida had been a strong advocate for a deal.

But his relations with Honda president Toshihiro Mibe had “deteriorated as Honda became frustrated with the speed of Nissan’s restructuring and the depth of its financial troubles”, the paper said.

Both Honda and Nissan declined to comment on the report.

Nissan announced thousands of job cuts last year after reporting a 93% plunge in first-half net profit, and on Thursday said it expected an annual loss of more than R9.1-billion.

The Financial Times said Uchida faced pressure to depart from board members over the failed talks, although he had indicated a desire to stay in the top job until 2026.

Mibe said Thursday that the automakers would continue to seek “synergy” through a strategic partnership announced in August that also included Nissan’s other partner, Mitsubishi Motors.

ALSO READ: It is over: Honda-Nissan merger talks reportedly at a dead end