Nissan calls off merger talks with Honda: Report

Nissan has cancelled merger discussions with Honda. This effectively puts on hold what would have been the world's number three automaker, Reuters reported. 

Nissan shares fell more than 4% before trade was suspended by Tokyo Stock Exchange, following the report by Nikkei. Honda shares were up around 8%, in signs of relief about the deal not taking place. 

A representative of Nissan noted that the Nikkei report was  "not based on information announced by Nissan. We aim to finalise our direction by mid-February and will announce it at that time."

A Honda representative noted that the firm had not heard back from Nissan regarding decision of withdrawing from MoU of working on a tie-up. 

Reuters had earlier stated that Nissan could cancel the discussions and that a board meeting had been scheduled to decide a course of action. 

Honda and Nissan had last year noted that they were in talks to amalgamate and form the world's largest automaker by sales. Talks became difficult, given the increasing differences on both the sides, as per sources in the know, who requested anonymity. 

Honda had cautioned Nissan about becoming a subsidiary, noting that such an arrangement was a divergence from previous talks of being a merger of equals, one of the sources had noted. 

Nissan is in the midst of a  turnaround plan, planning to let go of 9000 employees and slash 20% of its global capacity, the newswire noted. 

Nissan has taken a more severe beating than other carmakers, in the transition to electric vehicles, and has not fully recovered  after years of crisis sparked by the arrest and ouster of former Chairman Carlos Ghosn in 2018.

Nissan's long term partner Renault, which controls 36% of Nissan, had noted that it would be okay in principle to the amalgamation with Honda. 

Nissan and Honda had earlier noted that they would take a call on the direction the merger was headed towards, by January-end, but it got pushed back to mid-February. 

Persons in the know had informed Reuters that Nissan's smaller alliance partner Mitsubishi Motors, which had mulled joining the merger, might not do so.