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Merger Alert: Honda, Nissan, and Mitsubishi Rev Up Against Global EV Giants

 

Nissan Motor Co. and Honda Motor Co. are reportedly in the preliminary discussions of a potential merger, according to insiders familiar with the matter. The merger, if finalised, would create a powerful player in the Japanese EV market, establish its position as a contender to automobile giant, Toyota Motor Corp and bolster competitors on global markets.

Post this news, Nissan’s stock rose 24% and was the car maker’s best intraday gain since its listing in 1999, while Honda dropped as much as 3.4%.

Honda’s Executive Vice President, Shinji Aoyama acknowledged other possibilities including a merger, capital integration, and establishment of a holding company. However, he declined to reveal when the decision might be made. The companies may announce a formal agreement on December 23, as TBS reported.

 

Potential Structure and Impact

 

Sources indicate that one of the scenarios considered is the establishment of a holding company which would control both ventures. Further, the capital relations of Mitsubishi Motors Corp. with Nissan would also take part in this transaction, expanding the scope of the merger. Moreover, Mitsubishi shares received a 17% boost from this development.

Experts believe that both automakers stand to gain from this potential collaboration. “Both players stand to gain from this merger,” said Vivek Vaidya, senior vice president of mobility at Frost & Sullivan. “The combined entity will be a complete automaker.”

The merger would effectively consolidate Japan’s automotive sector into two primary alliances: Honda, Nissan and Mitsubishi on one side while on the other side, Toyota group companies. These consolidations would provide the newly formed organization with more capabilities to respond to issues within the growing international auto environment especially as it transitions to EVs and advanced software systems.

 

Background and the Strategic Changes

 

Earlier this year, Honda moved to sign an initial cooperation deal with Nissan for electric vehicle batteries and software. In the past, Honda has seen a possible capital alliance with Nissan as its CEO Mr Toshihiro Mibe mentioned during an interview. The merger could also be a saviour to Nissan financially since it has been experiencing some turbulence in the past years. “If the merger does materialize, it would provide short-term relief for Nissan's financial struggles,” said Tatsuo Yoshida, Bloomberg Intelligence senior auto analyst.

 

Conclusion and Next Steps

 

Although, the talks are still at an early stage and may not result in an agreement, the prospect of a merger is a clear indication underscoring the urgency of companies adapting to a drastically shifting automotive landscape. It is said that the two firms are likely to ink an MoU to discuss mutual equity stakes in a new holding company.