TOKYO - Nissan’s CEO has informed Honda’s president of the company’s decision to terminate merger discussions. Why did the planned alliance between Japan’s second- and third-largest automakers break down?
When asked whether the talks had been abandoned, Nissan CEO Makoto Uchida did not respond, instead driving away in a luxury Cima sedan, his stern expression revealing the gravity of the situation.
Since December, Nissan and Honda had been engaged in discussions about a potential merger. However, one particular statement became a sticking point.
“We are not in a hierarchy of superior and subordinate; we are partners shaping the future together,” Uchida said.
Honda executives, however, had a different expectation.
“That statement was concerning. We believed there was a certain level of agreement that we would take the lead,” a senior Honda official said.
A major issue was the “integration ratio,” which is calculated based on the average stock prices of the companies over a certain period. Nissan’s market capitalization is roughly one-fifth that of Honda’s, leading to friction as both sides sought favorable terms.
Additionally, discussions became increasingly difficult due to Nissan’s ongoing restructuring efforts and differences over the unification of hybrid and other technologies. Frustrated by the stalemate, Honda proposed making Nissan a subsidiary, to which Nissan reacted strongly.
“That is absolutely unacceptable,” a senior Nissan official said.
As a result, Nissan solidified its decision to end the negotiations on the previous day.
This morning, Uchida visited Honda’s headquarters and conveyed the decision to President Toshihiro Mibe. A formal announcement confirming the collapse of the talks is expected soon.
With the automotive industry undergoing a once-in-a-century transformation, both Nissan and Honda now face the challenge of navigating an increasingly competitive landscape on their own.
Source: TBS
