Nissan shares post best day in 40 years after Honda merger talks

Nissan shares rose 24%, their best day since 1985, while Honda shares fell about 3% after media reports that the two Japanese companies may be considering a potential merger.

According to a report by the Nikkei newspaper, the two companies are considering operating under a holding company, with a memorandum of understanding to be signed soon, and plan to bring Mitsubishi Motors, in which Nissan owns a 24% stake, under the same holding company.

Vivek Vaidya, global head of customers at Frost & Sullivan, said the merger was prompted by Nissan’s poor financial performance. In November, it reported weak results for the second quarter that ended in September, lowered its annual revenue and profit forecasts, and announced plans to cut 9,000 jobs and reduce its production capacity by about 20%.