NISSAN Motor is seeking out a new partner as it prepares to end negotiations to form a joint holding company with Honda Motor, sources familiar with the matter said.
The Japanese carmaker is looking for a partner that would ideally be from the technology sector and US-based, said the sources, who asked not to be identified because the information is not public. North America is Nissan’s most important market and the wider shift towards electrification and automation has pushed global carmakers to seek out alliances with other industries.
Nissan shares jumped as much as 8.7 per cent in early afternoon trading in Tokyo on Thursday (Feb 6). Shiro Nagai, a Nissan spokesperson, declined to comment, adding that any details concerning talks with Honda would be announced as planned around mid-February.
The carmakers confirmed yesterday that they are still discussing various options, including the possibility of ending deal talks. Honda had floated the idea of acquiring Nissan and making it a subsidiary, which met with strong opposition within Nissan, one of the sources said. The level of investment was also a sticking point, the source added.
Honda had also made the restructuring of Nissan’s operations a prerequisite for any transaction to materialize. Yet, apart from reducing jobs and output, Nissan’s current plans do not include any plant closures.
Ending discussions with Honda, which were exclusive, would let either side walk away from the deal without having to pay a hefty cancellation fee of 100 billion yen (S$887 million), according to their memorandum of understanding on Dec 23.
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Nissan’s board is pushing chief executive officer Makoto Uchida and other executives to develop a more comprehensive restructuring plan in parallel to any discussions with any potential new partner, the sources said. The goal is to come up with a deeper revamp in time for Feb 13, when the maker of Altimas and Pathfinders is scheduled to report quarterly results. That’s also when the board will meet to formalize its decision, one source said.
Nissan has struggled to regain its footing since the 2018 arrest and purge of former chairman Carlos Ghosn on charges of underreporting compensation, leaving it with an outdated product lineup and too much production capacity.
The scope of Nissan’s financial crisis became obvious in November, when a 94 per cent drop in net income triggered plans to cut 9,000 jobs, lower production capacity by 20 per cent and slash its annual profit guidance by 70 per cent. Any new restructuring plans would go beyond those figures.
“Further earnings deterioration is possible at Nissan,” said Citigroup analyst Arifumi Yoshida. “Additional restructuring measures are vital.”
Hon Hai Precision Industry, the maker of iPhones known as Foxconn that is trying to establish a foothold in outsourced manufacturing of electric vehicles, put its interest in pursuing Nissan on hold last year when it became clear that the Japanese automaker was in negotiations for a potential combination with Honda. But the electronics contract manufacturer did not give up completely, preferring to see if the two would make legitimate progress towards a deal before deciding on its next move. BLOOMBERG
