Nissan shares suffered their worst drop in 26 years on news of the merger with Honda

At the low on December 26, Nissan shares were priced at 470 yen (about $3). At the close, the Japanese automaker’s shares were trading at 509.2 yen, down 7.8%. In turn, Honda shares in Tokyo rose 2% to a maximum of 1.54 thousand yen.

As Bloomberg notes, investors are concerned about the share split in the two automakers’ upcoming alliance. According to Nikkei, the initial Honda-Nissan ratio in the joint holding company will be 5:1, based on the companies’ current market capitalization. Honda’s capitalization as of December 26 was 7.1 trillion yen ($45 billion), Nissan’s was 1.86 trillion yen ($11.8 billion).

The 5:1 ratio could disappoint Nissan investors, as many expected to benefit more from its merger with Honda after the automaker’s poor performance in recent years, said Tatsuo Yoshida, senior analyst at Bloomberg Intelligence.

Nissan and Honda officially announced the merger on December 23 during a joint press conference in Tokyo, Reuters wrote. The automakers are scheduled to complete negotiations in summer 2025 and create a holding company in August 2026.

Reuters noted that the merger would create the world’s third-largest auto group by sales, behind Toyota and Volkswagen. Japan’s Mitsubishi could also join the merged company: its management will make a decision at the end of January.

For the first time, sources told the Financial Times that Nissan and Honda planned to merge into a single holding company in mid-December.