According to Reuters, Nissan & Honda called off a $58 Billion merger as the shareholders voted against the motion. The news agency further stated that Honda was planning to acquire Nissan and make it a subsidiary company, which was against the original plan of opening a joint venture.
Moreover, reports from The Financial Times stated that Honda is facing pressure from the shareholders to take complete ownership to revive the ailing company. Further, Honda was also worried about Nissan’s progress on a turnaround plan, which ignited the growing difference between the companies. Honda Chief Toshihiro Mibe clearly stated to the car maker that the merger could only proceed if Nissan were able to cut 9,000 jobs and cut down the production capacity by 20%.
The two giants grew further after the companies clashed against each other over asset equity ratio and valuation. Nissan’s struggling financial performance has caused its market capitalisation to shrink to just one-fifth of Honda’s, shifting the balance of power in negotiations.
Nissan executives were caught off guard by the new proposal, presented as a “take it or leave it” offer. However, the company plans to make a formal decision later this month. Both Nissan and Honda aim to finalise their future direction by mid-February.
