Honda Wants Nissan to Triple Profits Ahead of Merger Deal

Nissan is in survival mode and Honda is making demands that could kill the entire deal.

Transcript

Late last year, automakers Nissan and Honda revealed that they were in negotiations over a possible merger, made necessary by the fact that - after a horrible 2024 - Nissan is in survival mode.

And while talks continue, more of Honda’s seemingly non-negotiables are being revealed, including some that seem like such high bars they lead to questions over whether this could go through at all.

For one, recent reports say Honda wants Nissan to essentially triple its profits by August of next year, along the tentative timeline for the merger. This sounds tough on its own; worse if you consider that Nissan’s operating profit plummeted 90% in the first half of its fiscal year. Reports say the profit target would be tantamount to about a $2.6 billion profit increase.

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Oh, but Honda has more plans than just that: It’s also been revealed that Honda allegedly has concerns about a large Nissan stakeholder – Renault, a French automaker that’s part of an alliance with Nissan and holds a stake in it of 35%.

A Bloomberg report says Honda fears Nissan could fall under “undesirable foreign influence” if a third party were to buy up the stake Renault currently holds during negotiations. Therefore, the report says Honda wants Nissan to buy Renault’s stake itself, which would mean shelling out more than $3 and a half billion.

For a company who saw its net income fall 94% in the first half of its fiscal year, all of this feels like a tall order – perhaps an insurmountable one.

Multiple reports have suggested that the Japanese government is pushing the merger behind the scenes, based on the interest expressed in Nissan by Foxconn. The idea is that Japan would do anything to prevent one of its historic brands from becoming a Taiwanese company instead.

But there’s a lot to achieve in order to make it work, and former Nissan Chairman Carlos Ghosn recently stated that he just doesn't see it, adding “the synergies between the two companies are difficult to find.”

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