Will Honda and Nissan merge?

Honda Motor Co. and Nissan Motor Co. are exploring a merger that would rival Toyota Motor Corp. in Japan and better cope with global competitive challenges.

SHARP FLUCTUATION IN SHARE PRICES

According to a Reuters report, Honda is evaluating various options, such as a merger, a capital partnership, or the establishment of a holding company, as stated by Executive Vice President Shinji Aoyama on Wednesday following reports of the talks overnight. Aoyama did not provide details on when a possible decision might be made.

The report stated that the companies could make an announcement on December 23. Following the news, Honda shares fell by as much as 3.4 percent. Nissan shares rose by as much as 24 percent, marking the largest single-day jump the company has experienced to date.

"TALKS ARE STILL IN THE INITIAL STAGES, AN AGREEMENT MAY NOT BE REACHED"

Sources who requested anonymity due to the private nature of the discussions said the pair are conducting preliminary talks about a merger. One of the sources said that the establishment of a new holding company under which the merged businesses would operate is one of the options being considered. According to the source, expanding the transaction to include Mitsubishi Motors Corp., which already has capital ties with Nissan, is also being evaluated. Mitsubishi shares rose 17 percent today.

However, the sources said that the talks are in the early stages and that an agreement may not be reached.

News Source: 12punto