On February 13, Honda (HMC) CEO Toshihiro Mibe announced that the merger discussions with fellow Japanese rival Nissan (NSANY) fell apart just two months after they began.
Previously, they framed the merger as a survival tactic against more technologically advanced and industrially capable companies like Tesla (TSLA) and BYD (BYDDY) , pooling their strengths and resources for the future of cars.
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However, in a joint statement, Honda acknowledged that it proposed to divert from its original intention to one where “Honda would be the parent company and Nissan the subsidiary through a share exchange,” a condition that broke down talks.
Nissan was on the edge before the merger was announced. A month earlier, Nissan execs told the Financial Times that the automaker had “12 to 14 months” to survive if circumstances improved.
Makoto Uchida, chief executive officer of Nissan Motor Co., left, and Toshihiro Mibe, chief executive officer of Honda Motor Co. A new report from Nikkei suggests that Nissan is reconsidering Honda’s offer that previously broke them apart.
Report: Nissan may head back to the table
According to a report by the Japanese business publication Nikkei, Nissan is reconsidering Honda’s offer of a potential merger and possibly pursuing a four-company collaboration involving Hon Hai Precision Industry (also known as Foxconn) and Mitsubishi Motors.
Citing unknown sources, they allege that Nissan is weighing Honda’s offer of being bought out and run as a Honda subsidiary. According to them, they are willing to accept an investment of any size.
“We don’t know if it will be a wholly owned subsidiary, but the talks will probably proceed in the direction of accepting Honda’s investment,” Nissan insiders told Nikkei, translated from Japanese.
Honda’s subsidiary proposal was seen as a bridge too far for Nissan and CEO Makoto Uchida. In remarks before its earnings presentation on February 13, Uchida said that Nissan’s board of directors recognized that such a move could diminish Nissan’s decision-making abilities.
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“We were not confident that our autonomy would be preserved or that Nissan’s potential would truly be maximized,” Uchida said. “I had doubts whether it would be successful.”
However, a key investment condition concerns Nissan President and CEO Makoto Uchida. According to a close Nissan source, most of Nissan’s CEO nominating committee is not in favor of keeping Uchida. A final decision will be made during a board meeting later this month.
“We are approaching a time when personnel, including the top management, will undergo major changes,” a source told Nikkei, translated from Japanese.
The next scheduled nomination committee meeting is on March 6, where they will discuss candidates for the top position. Nissan’s board of directors will decide Uchida’s fate in mid-March.
Related: Nissan CEO’s days could be numbered after Honda fallout
Another Nissan exec may take the top helm
The Nikkei report comes on the heels of previous reports that suggested that the CEO’s replacement may come from inside the company.
Despite aggressively implementing reforms to cut costs, one source close to Nissan told Automotive News that the board was frustrated with its timing and supposed effectiveness, leading it to consider possible successors.
Japanese business publication Diamond Weekly named two potential candidates who could succeed Uchida at the helm of Nissan. Former Nissan Americas chairman and current Nissan CFO Jeremie Papin, and current Nissan Chief Performace Officer Guillaume Cartier have been seen as potential successors by Nissan’s top brass.
They noted that Papin, the former chairman of Nissan Americas, was more receptive and open to Honda’s proposal to make Nissan a subsidiary instead of merging. According to Nikkei, if talks resume, he is expected to carry on negotiations with Honda.
The Nissan Motor Company trades on OTC markets in the United States as NSANY and on the Tokyo Stock Exchange under the ticker number 7201.
The Honda Motor Company is listed on the New York Stock Exchange under the ticker HMC.
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