(Bloomberg) — Honda Motor Co. threatened to end its strategic software partnership with Nissan Motor Co. should it look to join hands with Hon Hai Precision Industry Co., according to Nikkei.
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Honda also said it would act as a white knight to protect Nissan if Hon Hai, the major iPhone-maker known as Foxconn, attempts a hostile takeover, the report said.
Official talks, including around a possible merger, between the two Japanese companies may start as soon as Dec. 23, Nikkei reported. The negotiations hold the potential to create the world’s third-biggest carmaker, positioning it better against industry leader Toyota Motor Corp. and others in a tumultuous global market.
Honda’s shares fell more than 2% in early trading Thursday, while Nissan was trading up by 1% after jumping a record 24% on Wednesday.
Honda is weighing several options, according to Executive Vice President Shinji Aoyama, which include a merger, a capital tie-up and even the formation of a holding company. The alliance could also include Mitsubishi Motors Corp., with which Nissan already has a strategic partnership.
Representatives for Honda and Nissan didn’t immediately reply to a requests for comment regarding the start date for talks.
Honda and Nissan’s move to strengthen ties comes after Foxconn approached Nissan about acquiring a stake in the company, Bloomberg reported Wednesday.
A merger of the Japanese car brands would create a bulwark against the Toyota group at home and allow Honda and Nissan to pool resources to compete with Tesla Inc. and Chinese carmakers such as BYD Co. in global markets.
“It’s only natural for the consolidation of major carmakers to become more common as the industry undergoes a shift toward vehicles with sophisticated technology,” Subaru Corp. CEO Atsushi Osaki said during a group interview in Tokyo on Wednesday. “We need to join hands to take on challenges too difficult to overcome alone.”
Renault SA meanwhile is open to the idea of a merger between Honda and Nissan, according to people familiar with the situation. With a 36% stake, Renault remains Nissan’s biggest shareholder and its approval will be key to any agreement.
–With assistance from Tsuyoshi Inajima.
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