Nissan shares fall at fastest pace in 26 years

Japanese carmaker Nissan Motor Co. shares fell on Friday to their lowest levels since last August, amid investor concerns over the terms of its merger deal with Japanese counterpart Honda Motor.

Bloomberg reported that Nissan shares fell during Friday’s trading by 15%, the largest one-day decline in 26 years, before recovering some of its losses and recording a decline of 7.8% at the close.

Nissan Motor Corp. and Honda Motor Co. announced earlier this week plans to combine their efforts to form the world’s third-largest automaker by sales.

The two companies said they signed a memorandum of understanding last Monday in this regard, and that Mitsubishi Motors, the smallest member of the Nissan alliance, also agreed to join the talks to merge its businesses.

The Nikkei business daily reported today that the initial share transfer ratio between Honda and Nissan is estimated to be 5-to-1.

The “harsh reality” of the 5-to-1 share transfer ratio may be disappointing to Nissan investors, many of whom had hoped for greater gains from the merger with Honda given Nissan’s poor stock performance in recent years, said Tatsuo Yoshida, an economist at Bloomberg Intelligence.

Japanese automakers have lagged behind their major rivals in the electric vehicle industry and are now looking to cut costs and make up for lost time.