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Foxconn is reportedly interested in snatching Nissan (NSANY.US) and Honda (HMC.US) from each other's hands, with Honda threatening to withdraw from the partnership.

Market IntelWednesday, Dec 18, 2024 11:40 pm ET

1min read

Honda (HMC.US) reportedly threatened Nissan (NSANY.US) that it would terminate its strategic software partnership with Nissan if Nissan wanted to team up with Foxconn (Foxconn Industrial Internet), according to a report.

Honda reportedly also said that it would act as a white knight to protect Nissan if Foxconn tried to make a hostile takeover.

Formal negotiations between the two Japanese companies, including a possible merger, could start as early as Dec. 23, according to the report. The talks could create the world's third-largest automaker, better positioning it to compete with industry leader Toyota (TM.US) and others in the volatile global market.

Honda's executive vice president Shinji Aoyama said the company was weighing several options, including a merger, capital cooperation, or even a holding company. The alliance could also include Mitsubishi, with which Nissan has already established a strategic partnership.

Representatives for Honda and Nissan did not immediately respond to requests for comment on the start date of the negotiations.

Following reports that Foxconn had approached Nissan about buying its shares, Honda and Nissan took steps to strengthen their cooperation, according to a report on Wednesday.

A merger of the two Japanese car brands would establish a fortress in Japan against Toyota and allow Honda and Nissan to focus resources on competing with Chinese automakers such as Tesla (TSLA.US) and BYD (01211) in the global market.

"As the automotive industry shifts toward advanced technology, the integration of major automakers becomes more common, and it is natural," Subaru (FUJHY.US) CEO Atsushi Osaki said in an interview in Tokyo. "We need to work together to tackle challenges that are difficult to overcome alone."

Meanwhile, Renault (RNLSY.US) is open to the idea of a merger between Honda and Nissan, according to people familiar with the matter. Renault, which owns 36% of Nissan and remains its largest shareholder, would need to approve any deal, and its backing would be key.

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