Nissan has shifted its focus towards finding a new strategic partner, potentially outside the automotive sector, after it ended merger discussions with Honda, the Financial Times reports.
The Japanese carmaker’s CEO, Makoto Uchida, informed Honda’s CEO, Toshihiro Mibe, that the planned merger aimed at creating the world’s fourth-largest automaker would not move forward.
According to sources familiar with the matter, Nissan’s search for a new partner will likely extend beyond the automotive industry, signaling a strategic pivot as the company looks to revive its business. Among the options being explored, some board members have expressed interest in collaborating with Taiwanese tech giant Foxconn. The Apple supplier had approached Nissan’s alliance partner Renault late last year about acquiring part of its stake in Nissan, which prompted the brief round of merger talks with Honda.
The merger talks between Nissan and Honda began in December, with the goal of combining the two companies into a $58 billion entity. However, the discussions quickly turned contentious. On the weekend prior to the talks’ collapse, Honda made a new demand that Nissan accept an offer to become a fully owned subsidiary, a deviation from the initially agreed-upon structure of a joint holding company. Nissan’s board rejected this offer, citing concerns over losing decision-making power and fearing that Nissan’s brand would be diminished under Honda’s leadership.
A board meeting on Wednesday confirmed that Nissan would officially end the talks, as Honda’s offer was deemed unacceptable. Both companies declined to comment publicly on the matter, but it is expected that they will address the termination of the discussions in their upcoming earnings announcements next week.
The breakdown of the merger talks was not entirely unexpected, as analysts had voiced skepticism about the feasibility of the union from the beginning. The two companies have very different corporate cultures, with Nissan known for its engineering expertise and Honda’s long-standing tradition of independence. The potential merger would have required navigating these cultural differences, a challenge that ultimately proved too great to overcome.
With the collapse of the merger, attention now turns to Foxconn, which could seek to acquire Renault’s stake in Nissan, following the latter’s decision to downsize its 36% shareholding in the company as part of a broader restructuring of their alliance in 2023. Foxconn’s EV division has been expanding, and acquiring Nissan’s stake would provide a significant platform for growth in the electric vehicle market. Jun Seki, Foxconn’s chief strategy officer for EVs, has a history with Nissan, having served as the company’s number-three executive until the end of 2019.
