Nissan Seeking New Partners With Honda Deal Set to Collapse
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Nissan Motor Co. is seeking a new partner as it prepares to end negotiations to form a joint holding company with Honda Motor Co., people familiar with the matter said.
The Japanese carmaker is looking for a partner that would ideally be from the technology sector and U.S.-based, said the people, who asked not to be identified because the information isn’t public. North America is Nissan’s most important market, and the wider shift toward electrification and automation has pushed global carmakers to seek out alliances with other industries.
Nissan shares jumped as much as 8.7% in early afternoon trading in Tokyo on Feb. 6. Shiro Nagai, a Nissan spokesperson, declined to comment, adding that any details concerning talks with Honda would be announced as planned around mid-February.
The carmakers confirmed Feb. 5 that they are still discussing various options, including the possibility of ending deal talks. Honda had floated the idea of acquiring Nissan and making it a subsidiary, which met with strong opposition within Nissan, one of the people said. The level of investment was also a sticking point, the person added.
Honda had also made the restructuring of Nissan’s operations a prerequisite for any transaction to materialize. Yet, apart from reducing jobs and output, Nissan’s current plans do not include any plant closures.
Nissan CEO Makoto Uchida (left) and Honda CEO Toshihiro Mibe. (Kiyoshi Ota/Bloomberg News)
Ending discussions with Honda, which were exclusive, would let either side walk away from the deal without having to pay a hefty cancellation fee of 100 billion yen ($657 million), according to their Dec. 23 memorandum of understanding.
Nissan’s board is pushing CEO Makoto Uchida and other executives to develop a more comprehensive restructuring plan in parallel to any discussions with any potential new partner, the people said. The goal is to come up with a deeper revamp in time for Feb. 13, when the maker of Altimas and Pathfinders is scheduled to report quarterly results. That’s also when the board will meet to formalize its decision, one person said.
Nissan has struggled to regain its footing since the 2018 arrest and purge of former Chairman Carlos Ghosn on charges of underreporting compensation, leaving it with an outdated product lineup and too much production capacity.
The scope of Nissan’s financial crisis became obvious in November, when a 94% drop in net income triggered plans to cut 9,000 jobs, lower production capacity by 20% and slash its annual profit guidance by 70%. Any new restructuring plans would go beyond those figures.
“Further earnings deterioration is possible at Nissan,” Citigroup Inc. analyst Arifumi Yoshida said. “Additional restructuring measures are vital.”
Hon Hai Precision Industry Co., the maker of iPhones known as Foxconn that is trying to establish a foothold in outsourced manufacturing of electric vehicles, put its interest in pursuing Nissan on hold last year when it became clear that the Japanese automaker was in negotiations for a potential combination with Honda. But the electronics contract manufacturer didn’t give up completely, preferring to see if the two would make legitimate progress toward a deal before deciding on its next move.
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