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The $58bn merger between Honda and Nissan is on the verge of collapse as a majority of Nissan board members agreed to reject the deal after an attempt by Honda to turn its rival into a fully owned subsidiary.
The two groups announced discussions on a combination in December, but just over 40 days later the talks have soured, as Honda faces shareholder and internal pressure to take full ownership to revive the ailing carmaker, according to three people familiar with the matter.
The latest proposal, delivered to Nissan at the weekend, deviates from initial plans to bring the two companies under a jointly owned holding company, 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 new proposal — delivered as a “take it or leave it” offer — but the company will make a formal decision later this month, the people said.
The talks for a merger were triggered after Taiwanese iPhone contract manufacturer Foxconn approached Renault about acquiring part of its stake in Nissan late last year. Renault had been offloading its shareholding in Nissan following a restructuring of their 25-year alliance in 2023.
During the board meeting on Wednesday, concerns were raised about Foxconn’s return, but they were overridden by opposition to Nissan becoming a Honda subsidiary, said one person with direct knowledge of the talks.
Another person close to Nissan said they thought Honda’s sudden “aggressive” change of posture suggested it was looking for a way out of merger talks.
Last week, France’s Renault, which holds a 36 per cent stake in Nissan, urged its Japanese partner to negotiate a higher premium on its stake to account for Honda taking control. Renault also pressured Nissan not to drag out talks, out of concern it needed to focus on reviving its business.
Renault reiterated its position, said that “the most recent information relayed by the press indicates that no decision has been made by Honda and Nissan yet, and also suggests that the contemplated transaction would result in a takeover of Nissan by Honda, without a control premium for Nissan shareholders”. It added that it would “vigorously defend the interests of the group and its stakeholders”.
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.
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.
Nissan shares fell nearly 5 per cent and Honda’s were up 8 per cent on Wednesday.
During the press conference unveiling merger talks in December, Honda chief Toshihiro Mibe said a 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 their management integration by the end of January, but that plan has been pushed back to mid-February.
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