Nissan suspends merger talks with Honda — Nikkei

Nissan is halting merger talks with Honda, Nikkei reports. This merger could have made them the third largest automaker in the world, but now there are doubts about Nissan's ability to overcome the economic crisis on its own.

Nissan shares fell more than 4% before the Tokyo Stock Exchange temporarily suspended trading following the announcement. Honda shares continued to trade and ended the day up more than 8%, indicating investors' apparent relief that the deal would be canceled.

Honda, Japan's second-largest automaker, and Nissan, the third, announced last year that they were in talks over a possible merger to create the world's third-largest automaker by sales. The merger would strengthen their position in a market where they face intense competition from Chinese electric car maker BYD and other companies.

But the negotiations were complicated by disagreements between the parties, according to sources familiar with the situation. The companies could not agree on the valuation of each within the joint holding.

One of the interlocutors also noted that Honda has offered to make Nissan a subsidiary, but Nissan considers this a departure from the original idea of a merger of equal companies.

By the way, Nissan and Honda in separate statements denied the Nikkei report, noting that it was not based on their official information. Both companies intend to determine the future direction of development by mid-February.

The situation raises questions as to how Nissan, which is currently undergoing a complex restructuring, will be able to cope without external support. The company plans to cut 9,000 employees and 20% of its global capacity.