By Sean McLain and Megumi Fujikawa

Nissan's board is planning to reject Honda's terms for a combination of the two automakers, putting in danger a merger plan announced less than two months ago, people familiar with the matter said Wednesday.

Nissan's board was scheduled to meet later Wednesday, and the people cautioned that no final decision to kill the deal has been made.

The two Japanese automakers said on Dec. 23 that they planned to combine under a structure in which Honda and Nissan would both be subsidiaries of a single holding company.

In recent days, Honda presented a new proposal that would have made Nissan a subsidiary of Honda instead of the more equal structure originally planned, according to a person familiar with the negotiations. The person said Nissan found the new proposal unacceptable and planned to reject it.

The person said Nissan and Honda would continue other cooperation that predates the merger talks, including collaboration on software and electric vehicles.

Honda said it was continuing to discuss the potential combination with Nissan and aimed to decide on a general plan by mid-February.

Nissan shares had jumped on the initial merger announcement in December but fell back in the following weeks. Nissan shares were up about 1% in Tokyo trading Wednesday. Honda shares rose 2.5%.

If the automakers' plan to combine falls apart, it would raise pressure on Nissan to reassure lenders, employees and customers that it can survive amid stiff competition in the U.S. and China. Nissan has lost ground in both markets.

Nissan said in November that it would lay off 9,000 workers and slash its factory capacity by one-fifth to cut costs.

Write to Sean McLain at sean.mclain@wsj.com and Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

February 04, 2025 23:36 ET (04:36 GMT)

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