Japanese auto giants Honda and Nissan on Thursday confirmed they had scrapped merger talks announced in December, bringing an end to a tie-up that would have created the world’s third-largest automaker.
The firms said in a joint statement that they “agreed to terminate the MOU (memorandum of understanding) signed on December 23 last year for consideration of a business integration between the two companies.”
The firms’ intention to join forces had been seen as a bid to catch up with Tesla and Chinese firms in the electric vehicle market.
Honda’s CEO insisted in December that it wasn’t a bailout for Nissan, which last year announced thousands of job cuts after reporting a 93 percent plunge in first-half net profit.
Local media reports have said the discussions unravelled after Honda proposed making its struggling rival a subsidiary instead of the plan, announced in December, to integrate under a new holding company.
In the joint statement, the automakers confirmed Honda “proposed changing the structure from establishing a joint holding company … to a structure where Honda would be the parent company and Nissan the subsidiary through a share exchange.”
“As a result of these discussions, both companies concluded that, to prioritize speed of decision-making and execution of management measures in an increasingly volatile market environment heading into the era of electrification, it would be most appropriate to cease discussions and terminate the MOU,” the statement said.
The cancellation of the merger talks won’t impact the earnings of either automaker, it said.
Honda reported a 7% decline in profits Thursday for April-December, to 805 billion yen ($5 billion), while Nissan projected an annual net loss of $518 million due to sagging sales for the 12 months ending in March. That would be a drastic reversal from a profit of 426.6 billion yen ($2.7 billion) in the previous year.
Mitsubishi Motors Corp. had said it was mulling joining the Honda-Nissan combination. A three-way merger could have resulted in a company worth more than $50 billion based on their market capitalization in December.
The three automakers said Thursday they would keep working together on electric vehicles and smart cars, such as those with autonomous driving capabilities.
The three-way merger would have created The merger was estimated to be worth more than $50 billion.
