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Honda and Nissan in Merger Talks

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Honda and Nissan are exploring a potential merger that could create a combined entity valued at over $50 billion. The deal aims to address intense competition in the Chinese market and capitalize on the growing electric vehicle industry.

Honda shares surged as much as 14%, also benefiting from the announcement of a 1.1 trillion yen ($7 billion) stock buyback. The combined entity could be valued above $50 billion, based on the market worth of all three manufacturers. It comes as Honda and Nissan grapple with heightened competition in their major market China, especially from the fast-growing electric vehicle industry.

Last month, Nissan revealed plans to reduce its global workforce by 9,000 jobs and cut 20% of its production capacity following a sharp decline in sales in crucial markets like China and the U.S. Meanwhile, Honda reported disappointing earnings due to a drop in sales in China, though its strong performance in motorcycle and hybrid vehicle segments provided some financial stability. The two companies would aim for combined sales of 30 trillion yen ($191 billion) and operating profit of more than 3 trillion yen through the potential merger, their chief executives said during a press conference on Monday. They aimed to finalize discussions by June 2025 and establish a holding company by August 2026, at which point both companies' shares would be delisted

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