Nissan CEO says it will be ‘difficult to survive’ without partnerships after Honda merger collapses
The big merger between Nissan (NSANY) and Honda (HMC) is no more.
In a statement on Thursday, the boards of both companies said they decided to mutually terminate their memorandum of understanding signed last August for a proposed tripartite deal that would have included Mitsubishi as well.
Honda and Nissan claim they will form a strategic partnership to collaborate on electric vehicles and other technologies, but the loss of the deal is a huge blow to Nissan — and even Honda.
Honda CEO Toshihiro Mibe tried to strike a positive tone at a media briefing. “While the outcome is unfortunate, we now have a mutual appreciation of our synergies that can be utilized in our existing strategic partnership.”
Nissan CEO Makoto Uchida was more blunt about what the future holds for Nissan without a major partner. “It will still be difficult to survive without leaning on future partnerships,” he said.
Honda US-listed shares were trading higher on Thursday, while Nissan shares in Japan slipped.
Despite both Honda and Nissan’s desire to make a deal, the two Japanese icons have their own cultures and reputations, which may have led to the deal’s unraveling, per some reports. Honda, in the more enviable position, looked at Nissan as a troubled partner that needed more cost cuts, which apparently did not happen at the speed Honda desired.
Honda was also concerned a merged entity would not be nimble enough to respond to a rapidly evolving auto market.
“We need to be speedy, and we thought this structure [where both brands operated under a new holding company] wouldn’t function well to achieve that objective,” Mibe said at the briefing.
Honda then reportedly wanted to make Nissan a subsidiary, which Nissan wasn’t going to allow. Nissan felt like a subsidiary with its alliance partner Renault (RNO.PA), and the company still feels disrespected in some fashion to this day.
“With the proposal suggesting Nissan would become a wholly owned subsidiary, we were not confident that our autonomy would be preserved or Nissan’s potential could be truly maximized,” Nissan’s Uchida said.
Even Renault balked at the terms of the merger, claiming there wasn’t enough premium paid for its Nissan shares.
Honda ruled out a nuclear option as well, claiming a hostile takeover was off the table.
Nissan is left with few options at this point. Taiwanese device maker Foxconn said it was interested in an investment with Nissan in order to build out its EV production capabilities.
“If cooperation requires [purchasing Nissan shares], we will consider it,” Foxconn chairman Young Liu told reporters on Wednesday. Liu was quick to add that Foxconn desired cooperation, not that it needed to buy shares to achieve this outcome.
