Renault, a major shareholder of Nissan (NSANY.US), is open to merger talks with Honda (HMC.US), according to reports.
1min read Renault, the largest shareholder of Nissan, is open to the Japanese carmaker's merger talks with Honda, according to people familiar with the matter. The French carmaker is eager for Nissan to find a way to strengthen itself, as Renault itself is not willing to invest in the Japanese carmaker, the people said. Renault's approval would be key to any deal, as it holds 36% of Nissan's shares.
Japan's two biggest carmakers, Honda and Nissan, are set to start merger talks, with the possibility of bringing Mitsubishi into the alliance - Nissan is currently the largest shareholder of Mitsubishi, holding 24% of its shares. Shinji Aoyama, executive vice president of Honda, said the company was considering all options, including a possible merger with Nissan. He added that both companies were considering setting up a holding company to run the business.
Once completed, the deal would be the largest automotive merger since Fiat Chrysler and French PSA Group merged to form Stellantis, creating the world's third-largest car group.
While Renault is open to deals that could make Nissan stronger in principle, it will closely assess any offers made to Nissan to protect its own interests, the people said. The talks between Nissan and Honda are still in the early stages, the people added.
The Renault stake is an extension of the long-standing relationship between the two carmakers. Renault chairman Jean-Dominique Senard said earlier this year that the carmaker would welcome a new partnership if it made the group stronger.
Nissan was recently reported to be on the brink of bankruptcy, with at least two Nissan executives saying the company was looking for new investors. "With the current cash flow level, Nissan may only survive for 12-14 months, and new investment is urgent," the company's executives said.
Nissan said last month that its half-year net profit had fallen by more than 90% from a year earlier and cut its annual operating profit forecast by about 70%. It said it would have to cut 9,000 jobs globally. It also announced it would cut global production by 20% as consumers showed little interest in its unexciting product line.
