Nissan and Honda pull the pin on merger 

Nissan and Honda today mutually agreed to terminate the memorandum of understanding signed on December 23 last year.

The MOU related to proposed business integration between the two companies. They had until midyear to iron out the fine print. It would have created the world’s third largest car company, perhaps bigger had Mitsubishi became involved in the deal.

The management teams of both companies discussed and considered the market environment, the objectives of the business integration, and the management strategies and structures post-integration. They also consulted with various stakeholders.

However, they agreed to terminate proceedings amid growing differences on how the merger would work. Honda proposed changing the structure from establishing a joint holding company to one where it would be the parent company. Nissan would have become the subsidiary through a share exchange. Honda suggested such an arrangement because it has a much greater market capitalisation than Nissan.

As a result of these discussions, both companies concluded that further talks would be fruitless.

Nissan has struggled to recover from a leadership crisis following the arrest of its former CEO and chairman, Carlos Ghosn, in late 2018.

Going forward, Nissan and Honda will continue to collaborate on the development and production of electrified vehicles. Last year they both lost ground in China, which is one reason they are cooperating on electrification.