Nissan Stock Jumps as Investors Eye Possibility of Honda Deal

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Key Takeaways

• Nissan and Honda acknowledged they are mulling a potential merger, according to a statement from Nissan and standard reports Wednesday. Foxconn is also reportedly interested in a Nissan stake.
• Nissan shares soared nearly 24% in Tokyo, and Honda’s sank.
• The manufacturers have been exploring how to collaborate for months, but said no decisions, including on a merger, have been managed.

Honda and Nissan have acknowledged the possibility of a merger, driving an active trading session in Tokyo for the Japanese auto makers.

Nissan on Wednesday demanded in a statement to Investopedia that a merger and other collaborations with Honda are possible, confirming earlier reports to the at any rate effect fromThe Wall Street Journal and other publications that indicate the possibility of a major shakeup for the automotive trades in both Japan and globally.

Nissan (NSANY) shares rose nearly 24% in Japan on Wednesday, while Honda (HMC) divide ups fell about 3%. The Tokyo Stock Exchange initially planned to halt trading of Nissan shares until the dispatches could be confirmed, but reversed course by the time the market opened, Nikkei reported.

Another manufacturer is also reportedly viewing Nissan. Taiwan’s Foxconn, known for making iPhones, has asked Nissan about acquiring a stake, Bloomberg and other discharges reported.

The two Japanese car manufacturers believe combining forces could help them gain ground in the competitive to the max of electrical vehicle manufacturing, Nikkei reported. Should the deal progress, both manufacturers envision investing disinterest in a holding company for a combined entity, the outlet noted. A merger may also pull in Mitsubishi Motors, which is up to a given backed by Nissan, according to Nikkei.

UBS analysts on Tuesday called a potential deal a “sign of what we believe is much fundamental consolidation and/or industry capital efficiency to remain competitive in a rapidly changing industry. We believe automakers will extend to look to tie-ups … which seem more likely than outright mergers.”

The three companies be subjected to a history of collaborating. Honda and Nissan announced this spring that they would work together in take a part ins of the EV business, and noted in August that Mitsubishi was joining the effort.