Honda and Nissan’s ‘merger close to collapse’
The merger between Nissan and Honda to create the world’s third-largest carmaker is reportedly close to collapse.
Sources close to the deal have told Reuters that Nissan is set to call off merger talks with rival Honda, abandoning the £46bn tie-up.
Those sources say that talks have been complicated by growing differences between the two Japanese automakers.
The news has moved both companies’ share price – Nissan’s stock fell almost 5%, with trading briefly suspended after the Nikkei newspaper reported that it has called off merger talks with Honda.
Nissan is reportedly unhappy that Honda had suggested it could become a subsidiary, rather than the two companies joining together in a merger of equals.
Honda’s shares, which continued to trade, jumped over 8%.
According to Reuters, Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalise a future direction by mid-February and announce it at that time.
The news that Honda, Nissan and Mitsubishi were in talks over a possible merger broke just before Christmas last year. If completed, it would combine Japan’s second- and third-largest carmakers, and add the smaller Mitsubishi, in a defensive effort to join forces as the automotive industry goes through its biggest ever period of upheaval
Key events
“Whatever you say about the automotive sector right now, it is not boring,” comments Russ Mould, investment director at AJ Bell.
He writes:
“After the week started with European carmakers staring down the barrel of tariffs from the Trump administration, there is now the news that Nissan’s merger with Honda is falling apart.
“Honda executing a three-point turn to propose Nissan becomes a fully owned subsidiary rather than bringing both names together under a jointly owned holding company means already fractious talks on the tie-up may have run out of road.
“Nissan’s negotiating position hasn’t been helped by its weak financial performance which has seen its market value plummet.
“Elsewhere, Toyota is in an acceleration phase after upgrading its full-year profit forecast and announcing plans to expand in China.
“While the West struggles with the transition to electric vehicles, China is pulling ahead in terms of adoption and Toyota has a bold plan to capture share in this market with plans to build a Lexus factory in Shanghai.
“Domestic electric vehicle makers have managed to undercut their global counterparts in China but Toyota clearly feels it can compete and, unlike some rivals, it has a strong balance sheet to underwrite its expansion strategy.
“The company has been well placed thanks to its focus on hybrid vehicles which are proving popular with motorists in the West beset with range anxiety about EVs, however there are signs this hybrid boom is starting to ease.”
US payroll growth beats forecasts
Employment at US companies picked up last month by more than forecast, an indication of resilient job growth.
Despite mounting geopolitical uncertainty. US private payrolls rose by 183,000 last month, beating forecasts of a 150,000 gain.
ADP Research also revised December’s payroll growth higher too, to 176,000.
Moana 2 helps Disney ride out hurricane disruption
The popularity of Moana 2 has helped Disney grow its revenues despite the disruption caused by a brutal hurricane season.
Disney has posted a 5% rise in its earnings in the last quarter – the three months to 28 December – with pretax profits up 27%.
Content sales and licensing returned to profit, with earnings up $536m to $312m “driven by the performance of Moana 2”.
But hurricanes Milton and Helene cost Disney $120m of profit.
The company says:
Domestic Parks & Experiences operating income declined 5%, reflecting a 9 percentage-point adverse impact to year-over-year growth due to the hurricanes and cruise pre-opening expenses
French carmaker Renault, which owns around a third of Nissan, says it will “vigorously” defend the interests of the group and its stakeholders.
A spokesperson for Renault added that recent press information indicates that no decision had yet been made on the possible end of merger talks between Honda and Nissan.
It was reported last week that Renault has urged Nissan to negotiate a higher premium from Honda in the merger.
Scrapping the Honda deal would leave Nissan stranded, fears Bloomberg Opinion columnist Gearoid Reidy.
Like the driver who stubbornly insists they know where they’re going but ends up lost, pride may have caught up with Nissan Motor Co.
Now, the Japanese automaker might be stranded in a place even AAA can’t reach it. News reports on Wednesday said Nissan has withdrawn from the agreement to combine with Honda Motor Co. in a $60 billion deal, just over a month after the two firms formally entered talks on what would have been a historic merger.
The sticking point appears to be Nissan’s demand that the merger be one of equals despite Honda having a market capitalization more than five times its size. Honda in turn had proposed first making Nissan into its unit, the reports said, ostensibly to quicken the pace of restructuring at the troubled firm — a proposal unlikely to have gone down well with executives at a company that traces its roots back to before World War I.
Reidy adds that Nissan needs the deal more than Honda, after years of cost-cutting by Carlos Ghosn left the automaker trailing in R&D in both electric vehicles and hybrids… More here.
At their current market capitalisations, a Honda-Nissan merger would have created a company worth around $60bn, or £48bn.
Honda is the more valuable of the two, with a value of ¥7.92trn according to LSEG data, or $51.8bn/£41.3bn.
Nissan is worth ¥1.44trn ($9.4bn/£7.5bn).
Perhaps that difference is why Honda reportedly sounded out Nissan about becoming a subsidiary – a proposal that seems to have gone down badly!
Honda and Nissan’s ‘merger close to collapse’
The merger between Nissan and Honda to create the world’s third-largest carmaker is reportedly close to collapse.
Sources close to the deal have told Reuters that Nissan is set to call off merger talks with rival Honda, abandoning the £46bn tie-up.
Those sources say that talks have been complicated by growing differences between the two Japanese automakers.
The news has moved both companies’ share price – Nissan’s stock fell almost 5%, with trading briefly suspended after the Nikkei newspaper reported that it has called off merger talks with Honda.
Nissan is reportedly unhappy that Honda had suggested it could become a subsidiary, rather than the two companies joining together in a merger of equals.
Honda’s shares, which continued to trade, jumped over 8%.
According to Reuters, Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalise a future direction by mid-February and announce it at that time.
The news that Honda, Nissan and Mitsubishi were in talks over a possible merger broke just before Christmas last year. If completed, it would combine Japan’s second- and third-largest carmakers, and add the smaller Mitsubishi, in a defensive effort to join forces as the automotive industry goes through its biggest ever period of upheaval
Bloomberg: China Weighs Probe Into Apple’s App Store Fees, Practices
Apple could soon find itself pulled into the trade war bubbling away between the US and China.
Bloomberg are reporting that China’s antitrust watchdog is laying the groundwork for a potential probe into Apple’s policies and the fees it charges app developers.
They report:
The State Administration for Market Regulation is examining Apple’s policies, which include taking a cut of as much as 30% on in-app spending and barring external payment services and stores, people familiar with the matter said. Agency officials have spoken with Apple executives and app developers since last year, said the people, who asked for anonymity to discuss sensitive moves.
The conversations stem from long-running disputes between Apple and developers such as Tencent Holdings Ltd. and ByteDance Ltd. over iOS store policies — a source of tension between the US company and regulators worldwide. While Beijing has since 2024 targeted the practices of US tech firms from Nvidia Corp. to most recently Alphabet Inc.’s Google, regulators may not formally move against Apple if the current conversations go well.
Both Apple and Google are also being investigated in the UK, where the CMA is looking into the tech firms’ mobile operating systems, app stores and browsers.
Shipping firm Hapag-Lloyd: too early to push the panic button on trade war
Container shipping liner Hapag-Lloyd believes it will be able to cope with the imposition of US tariffs on Chinese products, and Beijing’s retaliation.
Chief executive Rolf Habben Jansen told reporters on Tuesday.
“It is too early to push the panic button.”
Habben Jansen added that foreseeable events were easier to handle than the unexpected ones (such as the recent Houthi attacks on vessels in the Red Sea), saying:
“Fortunately we are able to react when transport flows change.”
Pound at one-month high
The pound has risen to a one-month high this morning, as the US dollar weakens.
Sterling is up half a cent against the US dollar to $1.2538, the highest since 7 January.
It has nudged higher after this morning’s PMI report (see earlier post), showed that input price inflation hit an 18-month high in January.
The pound could be volatile tomorrow, though, when the Bank of England is expected to cut UK interest rates and could also lower its growth forecasts.
With gold at a record high, Ricardo Evangelista, senior analyst at ActivTrades, says:
The precious metal is finding support amid dollar weakness and growing apprehension over the escalating trade war between the US and China, as well as its likely negative impact on global economic growth prospects.
The US dollar’s decline this week, which began after the administration’s last-minute U-turn on imposing additional tariffs on imports from Mexico and Canada, continued Tuesday following the release of disappointing labor and industrial data indicating a slowdown in the world’s largest economy. A weaker dollar is supportive of gold prices. At the same time, US tariffs on China and Beijing’s retaliation are ominous for the global economy, increasing the appeal of safe-haven gold.
This demand is further reinforced by renewed uncertainty in the Middle East, following Donald Trump’s comments about taking over Gaza and displacing the Palestinian population.”
Donald Trump’s astonishing declaration overnight that the US will take long-term ownership of the Gaza Strip could also be pushing gold higher, as investors wonder what impact this will have on the Middle East.
That move, and the new trade war with China, are both worrying markets, says Achilleas Georgolopoulos, senior market analyst at IG:
From a market perspective, Trump has essentially brought two new reasons into the spotlight that could potentially result in severe risk-off episodes.
At this juncture, the main beneficiary of Trump’s comments has been gold. At the time of writing, it is trading at $2,865, a new all-time high, as market participants are extremely concerned about Trump’s intentions regarding Iran.
UK firms slash jobs in January
UK companies cut staffing levels for the fourth month running in January, the latest survey of purchasing managers at British firms has confirmed.
S&P Global reports that aside from the pandemic, the pace of job shedding was the steepest since the global financial crisis more than 15 years ago.
They blame the increase in payroll costs, following the increase to employer national insurance contributions and the national minimum wage in last autumn’s budget, saying:
Lower workforce numbers reflected subdued demand conditions and ongoing efforts to mitigate higher payroll costs. Overall input price inflation hit an 18-month high in January.
That matches the message from the ‘flash’ PMI report in mid-January, which we covered here.
S&P Global also report that that UK services sector continued to expand last month.
Its UK Services PMI Business Activity Index has come in at 50.8 in January, down from 51.1 in December, and the joint-lowest for 15 months (but still over the 50-point mark showing stagnation).
