Honda Motor’s U.S.-listed shares surged nearly 6% in premarket trading following reports that the Japanese automaker’s proposed merger with Nissan is at risk due to a last-minute structural change introduced by Honda. The uncertainty casts doubt over a deal that was expected to create the world’s third-largest automaker, including Mitsubishi Motors.
According to the Financial Times, Honda has proposed a new framework that would see Nissan become a fully owned subsidiary, diverging from the initially planned “merger of equals.” This unexpected shift has reportedly created tensions between the two automakers, delaying the finalisation of the deal.
Nissan, responding to the reports, stated that the FT article was not based on officially announced information, reaffirming that the company aims to finalise its decision by mid-February. Honda has yet to issue a public comment on the matter.
The merger, announced in December, was seen as a strategic move to cut costs and strengthen the companies’ position in the global automotive industry. It was also expected to enhance their ability to compete with emerging Chinese electric vehicle (EV) manufacturers, which have been aggressively expanding their market presence.
Honda and Nissan have a history of collaboration, particularly in the EV sector. Last year, the two companies confirmed joint efforts in various aspects of EV development, with Mitsubishi later joining the initiative. A full-scale merger would have formalised and expanded this partnership, potentially creating a stronger force in the evolving global car market.
However, the uncertainty surrounding the structure of the merger now raises questions about whether the deal will proceed as originally envisioned. Investors appear to be responding positively to the possibility of Honda taking a dominant role, as evidenced by the sharp rise in the company’s stock price.
Honda’s shares have faced significant declines over the past year, falling nearly 18% through Tuesday. The potential merger, if successfully restructured, could provide the company with renewed strategic momentum in an increasingly competitive automotive landscape.
