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Nissan became the latest buyout target in Japan, as it explores a merger with Honda and faces an overture from Hon Hai Precision Industry, the Taiwan-based manufacturer of iPhones known as Foxconn.
Shares in Nissan jumped 24 percent on Dec. 18, the most on record to hit the daily limit, after the two Japanese carmakers acknowledged that talks are ongoing to better position themselves for competitive challenges during a time of upheaval in the global auto industry.
Foxconn, which has been investing heavily in factories to build electric vehicles, has also approached Nissan to take a controlling stake, a person with knowledge of the matter said.
It’s unclear if Nissan has entered talks with Foxconn or already rebuffed its overture, and the position of Renault — Nissan’s largest shareholder with a 36 percent stake — is also uncertain.
Yet the flurry of activity around Nissan reflects a charged corporate environment in which Japan’s biggest companies are vulnerable to takeover like never before.
Honda mulls options for Nissan tie-up
Honda is considering several options that may also involve a capital tie-up or the establishment of a holding company, Executive Vice President Shinji Aoyama said on Dec. 18.
One option being considered is the creation of a new holding company under which the combined businesses would operate, a person familiar with the talks said.
The transaction could also be expanded to include Mitsubishi Motors, which already has capital ties with Nissan, the person said.
Chart showing Honda, Nissan and Mitsubishi's market value.
Honda, Nissan and Mitsubishi's market value. (Bloomberg)
An announcement by Honda and Nissan could happen as soon as on Dec. 23, TBS reported on Dec. 18.
They plan to sign a memorandum of understanding to discuss shared equity stakes in a new holding company, the Nikkei reported earlier.
A spokesperson for Nissan declined to comment. A representative for Foxconn was not immediately available for comment.
The Nikkei suggested that Foxconn’s interest in Nissan accelerated the Honda-merger effort out of fears that the Japanese company may be vulnerable to a takeover by the Taiwanese company.
A similar dynamic is playing out with one of Japan’s biggest consumer brands, Seven & i Holdings, whose founding family is leading a consortium to take the company private in order to fend off a buyout proposal from Canada’s Alimentation Couche-Tard.
A merger between Honda and Nissan would effectively consolidate the Japanese auto industry into two main camps: One controlled by Honda, Nissan and Mitsubishi and another consisting of Toyota group of companies.
Nissan and Honda are facing challenges around the world, including in China, where both automakers are suffering.
The shift toward electrification, which is happening at varying speeds in different markets, is also disrupting manufacturing and business models that have been in place for decades.
Honda, Nissan, Mitsubishi sales still well short of Toyota
Honda, Nissan and Mitsubishi combined sold about 4 million vehicles globally in the first six months of the year, well shy of the 5.2 million that Toyota sold on its own.
Combining forces would allow the two companies to fend off Toyota, the world’s largest automaker, at home and abroad.
Toyota has taken stakes in Subaru, Suzuki and Mazda, creating a powerhouse of brands backed by its top-notch credit rating.
“There are just too many Japanese carmakers, and mergers are becoming necessary to become more competitive, globally,” said Hiroki Ihara, an analyst at Tachibana Securities.
For Foxconn, taking a controlling stake in a Japanese company would not be unprecedented. In 2016, it took a two-thirds stake in electronics maker Sharp, handing it a number of benefits including a well-known consumer electronics brand, LCD display production capacities and intellectual property. It has been reducing that interest slowly over time but is still the top shareholder.
Japanese business publication Diamond Online reported Foxconn’s proposal earlier Dec. 18.
For Nissan, one thing is for certain: it needs help to put it back on a stronger financial footing.
Revenue growth has stalled, profit is dwindling, and activist investors are adding pressure on its management. A daunting debt load has also led to speculation in the credit markets about its investment grade rating.
Articolo di Bloomberg.
Apparentemente Foxconn starebbe cercando di acquistare una quota di controllo di Nissan, avrebbe cercato contatti con Renault che ancora detiene il 36% della compagnia giapponese, attualmente in un fondo con la promessa di vendere fino al 15%.
Ci sono vari scenari di un possibile tie-up tra Honda e Nissan, in qualsiasi caso Honda sarebbe alla guida del gruppo.
Renault si è detta pronta a vendere le sue quote.
Honda-Nissan-Mitsubishi sarebbe il quarto costruttore al mondo ma con problemi finanziari non da poco ed una redditività bassa.
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