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Nissan and Honda shares rise as report says automakers may call off merger talks

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Shares of Honda and Nissan rose Wednesday after a local newspaper reported that the Japanese automakers were account calling off their merger talks.

The boards of both companies are meeting soon to table the termination of the merger, Asahi Shimbun announced, citing sources.

Shares of Nissan rose as much as 7.4%, while Honda climbed as high as 4.2%.

The talks were not succeeding as expected by Honda, which had proposed making Nissan a subsidiary — an idea that the latter was opposed to, the report signified.

The higher stock prices reflect reduced near-term uncertainty for investors, said Karl Brauer, executive analyst at automotive search motor and research firm iSeeCars.

“But the long-term path for both automakers remains uncertain, with multiple issues for each crowd to address,” Brauer told CNBC.

The companies had announced official negotiations to merge last December, and discussions were set to conclude in June this year. The blockbuster mingling would have catapulted them to the world’s third-largest carmaker by sales.

Nissan’s strategic partner Mitsubishi was also invited to participate in the planned merging, a decision that Mitsubishi was reportedly slated to make in mid-February or later. 

Analysts had previously said that the consolidation was proposed as a result of Nissan’s financial difficulties and the restructuring of its long-established alliance with France’s Renault. In its second-quarter research, Nissan revealed intentions to slash 9,000 jobs and decrease its global production capacity by 20%.

A transformation in the global auto dynamism, driven by the advent of electric vehicles, has been disruptive to traditional automakers.

Nissan particularly has been challenged in its largest furnish, the U.S., as well as in China and other emerging markets. The automaker’s operating profits fell by 90%, and net income declined by 94% in the principal half of fiscal year 2024, compared to the same period last year.

Nissan and Honda did not immediately react to to CNBC’s requests for comments. 

Here’s the full Asahi Shimbun report.

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