Nissan falls as shares pressured by Honda deal concerns

Nissan Motor Co. shares slid, heading for a two-day drop of 13 per cent, on concern the terms of the carmaker’s planned deal with Honda Motor Co. would give investors a lower stake in the proposed joint holding company.

The stock fell as much as 6.7 per cent on Monday in Tokyo. After initially soaring more than 60 per cent since December 17, a day before news of the deal broke, the stock tumbled on Dec. 27 as investor focus turned to the starting ratio for a Honda-Nissan tie-up. Shares were also vulnerable to profit-taking on the last trading session of the year.

The ailing Japanese automaker aims to establish and list a joint holding company with Honda in August 2026, according to a December 23 announcement. The exact terms of the arrangement are yet to be decided, but the share transfer ratio will take into account the carmakers’ stock prices, according to the companies. A Nikkei report on December 27 estimated the Honda-Nissan share ratio at 5:1.

Disappointment among investors who’d been hoping for a ratio more favourable to Nissan may have triggered selling of its shares, said Kazuhiro Sasaki, head of research at Phillip Securities Japan.

“Investors are adjusting positions and taking profits before the year-end, and Nissan was bought up recently, so will be a part of that," Sasaki said. Nissan’s financial situation remains a concern among investors, he added.

Irrespective of the short-term boost the Honda deal news may have given to Nissan’s share price, global fund positioning in the carmaker remains low, said Steven Holden, founder of Copley Fund Research.

“Sentiment is very bad," said Holden. “There’s very little positive activity around Nissan, in terms of funds opening and closing positions." Holden sees Nissan as one of the big losers in a worldwide trend away from automakers and toward big tech among global funds heading into 2025.

The broader Japanese stock market was also in profit-taking mode Monday, after five consecutive days of gains last week. The benchmark Topix index slid as much as 0.8 per cent in the last trading session of the year, dragged by electronics and automakers. Nissan was the worst performer on the blue-chip Nikkei 225 as of 3:24 p.m. in Tokyo.

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