Aiming to become the third-largest automaker in the world by revenues, Nissan Motor Co. and Honda Motor Co. (NYSE:HMC) declared Monday they are in official talks to consolidate operations. Honda CEO Toshihiro Mibe stated at a press conference that the possible merger aims to combine their resources to increase competitiveness in intelligent driving technology and electric cars.
With Honda nominating the majority of board members of the new company, the firms intend to create a holding company registered on the Tokyo Stock Exchange. The merged company is expected to have operating profit above 3 trillion yen ($19.1 billion) and revenue of 30 trillion yen ($191.4 billion).Comparatively to Nissan’s 568.7 billion yen ($3.6 billion), Honda declared an operating profit of 1.382 trillion yen ($8.8 billion) in the fiscal year ended March 2024. With Honda’s market value of $43 billion above Nissan’s $11 billion, the merger has a total worth of $54 billion.
Mibe claimed the merging would bring synergies and scale efficiencies, improving the market positioning of both brands while preserving their identities. By June 2025, the firms hope to have finalized negotiations. Following the announcement Honda shares were up by double-digit margins.
This article first appeared on GuruFocus.