According to informed sources, Renault SA, the largest shareholder of Nissan, is open to merger talks between Nissan and Honda Motor (HMC.US).
Zhitong Finance APP has learned that, according to informed sources, Renault SA, the largest shareholder of Nissan (NSANY.US), is open to merger talks between Nissan and Honda Motor (HMC.US). The sources say that since Renault itself is unwilling to inject capital into Nissan, it is eager for Nissan to find ways to strengthen itself. It is reported that Renault holds 36% of Nissan's shares, and its approval will be key to reaching any agreement.
According to reports, Japan's two major auto manufacturers, Honda and Nissan, will begin merger talks and may also involve Mitsubishi Motors to form an alliance - Nissan is currently the largest shareholder of Mitsubishi, holding 24% of its shares. Honda's Executive Vice President, Shinji Aoyama, stated that the company is considering various options, including a possible merger with Nissan. He added that both parties are indeed considering establishing a holding company to operate.
Once the merger is completed, it will become the largest merger in the Global Auto Industry since Fiat Chrysler merged with France's PSA Group to form Stellantis (STLA.US), thus creating the third-largest Auto Group in the world.
Informed sources pointed out that although Renault is generally open to trades that could strengthen Nissan, it will closely evaluate any offers made to Nissan to protect its own interests. The sources added that the negotiation between Nissan and Honda is still in its early stages.
Renault's shareholding is a continuation of its long-term cooperative relationship with Nissan and Mitsubishi. Renault's Chairman, Jean-Dominique Senard, stated earlier this year that it would welcome any new partnerships that could strengthen this auto manufacturing group.
Recently, Nissan was reported to be facing a bankruptcy crisis, and at least two internal Company Executives indicated that Nissan is looking for new investors everywhere. The Company Executives stated, "With the current level of Cash flow, Nissan may only survive for 12-14 months, and introducing new investment is urgent."
Nissan announced last month that its net income for the first half dropped by more than 90% compared to the same period last year, and it downgraded its annual operating profit forecast by about 70%. The company stated that it would have to lay off 9,000 people globally. The company also announced it would cut global production by 20% due to consumer disinterest in its lackluster product line.