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What you need to know
- According to media reports and a Nissan statement released Wednesday, Nissan and Honda have acknowledged that they are considering a merger. Foxconn, too, is reportedly interested.
- Nissan shares soared nearly 24% in Tokyo, and Honda's dipped.
- Since months the manufacturers have explored ways to work together, though no decision has been taken, even on whether or not a merger will take place.
Honda and Nissan acknowledge the possibility of merging, which has led to an active Tokyo trading session for Japanese car makers.
Nissan said on Wednesday in a press release to Investopedia, that a possible merger with Honda and collaborations are also feasible. This confirms earlier reports from The Wall Street Journal as well as other publications which indicate that the auto industry in Japan and worldwide could be reshaped in a big way.
Nissan (NSANY ) rose in Japan by almost 24% on Wednesday. Honda (HMC ) dropped about 3%. Nikkei reports that initially, the Tokyo Stock Exchange planned to suspend trading in Nissan until all the information could be verified. But they changed their minds by the time market opened.
Nissan is also being eyed by another manufacturer. Taiwan's Foxconn, known for making iPhones, has asked Nissan about acquiring a stake, Bloomberg and other outlets reported.
Nikkei said that two Japanese automobile manufacturers believed combining forces would help them gain a competitive edge in the world of electric vehicle manufacturing. If the deal goes through, both manufacturers will invest in equity for a holding corporation that would be a combined company, according to the outlet. Nikkei reports that a merger could also include Mitsubishi Motors which is partly backed by Nissan.
UBS analysts on Tuesday called a potential deal a "sign of what we believe is much needed consolidation and/or industry capital efficiency to remain competitive in a rapidly changing industry. We believe automakers will continue to look to tie-ups … which seem more likely than outright mergers."
Three companies are known to collaborate. Honda and Nissan announced in the spring they were going to work together for parts of the EV industry. Mitsubishi also joined in the August.
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