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Nissan And Honda Sign MOU To Explore Business Integration For Enhanced Competitiveness
Nissan Motor Co., Ltd. and Honda Motor Co., Ltd. have signed a memorandum of understanding (MOU) to explore a potential business integration through a joint holding company. This move aims to enhance their efforts towards achieving carbon neutrality and reducing traffic fatalities. The companies have been in discussions since March 15, focusing on strategic partnerships in vehicle intelligence and electrification.
On August 1, both companies signed another MOU to deepen their collaboration framework. They agreed to conduct joint research on fundamental technologies for next-generation software-defined vehicles (SDVs). This research focuses on intelligence and electrification, aiming to advance discussions towards concrete collaboration.
The integration could lead to significant synergies by combining management resources like knowledge, human resources, and technology. This would enhance their ability to respond to market changes and improve corporate value over the mid- to long-term. Additionally, it could contribute to Japan's industrial development as a leading global mobility company.
Nissan and Honda plan to establish an integration preparatory committee to facilitate smooth integration. Based on the committee’s discussions and due diligence results, they will examine specific synergies. The goal is to become a world-class mobility company with sales revenue exceeding 30 trillion yen and operating profit over 3 trillion yen.
The companies expect scale advantages by standardising vehicle platforms across various segments. This would create stronger products, reduce costs, enhance development efficiencies, and improve investment efficiencies through standardised production processes.
Joint research in fundamental technologies for SDVs has already begun under the MOU signed on August 1. Post-integration, both companies will collaborate more extensively across all R&D functions. This approach aims to efficiently enhance technological expertise while reducing development costs by integrating overlapping functions.
Optimising Manufacturing Systems
The companies anticipate optimising manufacturing plants and energy service facilities through shared production lines. This collaboration is expected to improve capacity utilisation significantly, leading to decreased fixed costs.
Strengthening competitive advantages across the supply chain is another focus area. By integrating purchasing functions, they aim to streamline operations and source common parts from the same supply chain in collaboration with business partners.
Operational Efficiency Improvements
The integration of systems and back-office operations is expected to drive significant cost reductions through operational efficiency improvements. By upgrading and standardising operational processes, both companies aim for substantial cost savings.
Integrating sales finance functions will allow them to expand operations and offer new financial services throughout the vehicle lifecycle. This expansion aims to provide a range of mobility solutions for customers of both organisations.
Establishing a Talent Foundation
A strong human resource foundation is crucial for transformation post-integration. Increased employee exchanges and technical collaboration are expected to promote skill development further. Leveraging each company's access to talent markets will make attracting exceptional talent more attainable.
Method of Business Integration
Nissan and Honda plan to establish a joint holding company through a share transfer, subject to shareholder approval and necessary authority approvals. Both companies will become wholly owned subsidiaries of this new entity, which will be listed on the Tokyo Stock Exchange's Prime Market in August 2026.
The organisational structure of the joint holding company will be optimised for synergy realisation post-integration. Discussions within the integration preparatory committee will determine this structure, focusing on efficient business operations after integration.
Management Structure Post-Integration
Honda plans to nominate most directors for the joint holding company upon share transfer completion. The president will be selected from Honda-nominated directors. Other details like name, registered office, representatives, executive composition, and organisational structure will be finalised before executing the definitive agreement based on discussions within the integration preparatory committee.
The schedule for business integration includes board resolutions by December 23, 2024, execution of MOU by December 23, 2024, definitive agreement by June 2025 (planned), extraordinary shareholders' meeting by April 2026 (planned), delisting by July-August 2026 (planned), with share transfer effective in August 2026 (planned).
The share transfer ratio will be determined before concluding the final definitive agreement based on due diligence results and third-party valuations referencing average closing prices over a certain period before announcing the MOU.
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