Honda shares set for best day in more than 16 years on share buyback plan, Nissan deal

Shares of Japanese automaker Honda had been on observe for his or her greatest day in 16 years after it announced to buy back up to 1.1 trillion yen ($7 billion) of its shares on Monday amid merger talks with Nissan.

Nissan and Honda stated they’d begun official negotiations to merge, which may catapult them to the world’s third-largest carmaker by gross sales.

Honda additionally introduced to purchase again 24% of its issued shares by Dec. 23 subsequent yr. Its shares had been final up 15.51%, and would clock their greatest day since October 2008, if positive factors maintain. Nissan shares fell over 1%.

The Honda-Nissan deal would give attention to sharing information and assets, attaining economies of scale and creating synergies, Honda CEO Toshihiro Mibe said. A holding firm can be established because the father or mother group for each Honda and Nissan, and can be listed on the Tokyo Inventory Change.

“These two corporations, they’re working in the identical market, they usually have very comparable model photographs, they’ve very comparable merchandise,” Hakan Dogu, chairman of Alagan Mobility Options, informed CNBC on Tuesday. 

“The brand new administration has an enormous problem to distinguish the product vary and likewise lengthen the enterprise,” he added. 

Discussions are set to conclude in June 2025.

Nissan’s strategic associate, Mitsubishi, has been given the chance to hitch the brand new group and is predicted to decide by the tip of January 2025.

Honda reported 1.382 trillion yen in working revenue for the total yr to March 2024, versus Nissan’s 568.7 billion yen. The automakers would have a mixed worth of practically $54 billion, with Honda’s market capitalization contributing the better $43 billion share.

Analysts suggested that the potential merger stems from Nissan’s monetary struggles and the restructuring of its long-standing partnership with France’s Renault.

In its newest quarterly report, Nissan announced plans to cut 9,000 jobs and cut back its international manufacturing capability by 20%.

—CNBC’s Jenni Reid contributed to this report.