Honda and Nissan’s ‘merger close to collapse’
The merger between Nissan and Honda to create the world’s third-largest carmaker is reportedly close to collapse.
Sources close to the deal have told Reuters that Nissan is set to call off merger talks with rival Honda, abandoning the £46bn tie-up.
Those sources say that talks have been complicated by growing differences between the two Japanese automakers.
The news has moved both companies’ share price – Nissan’s stock fell almost 5%, with trading briefly suspended after the Nikkei newspaper reported that it has called off merger talks with Honda.
Nissan is reportedly unhappy that Honda had suggested it could become a subsidiary, rather than the two companies joining together in a merger of equals.
Honda’s shares, which continued to trade, jumped over 8%.
According to Reuters, Nissan and Honda said in separate statements that the Nikkei report was not based on information announced by the companies and that they aimed to finalise a future direction by mid-February and announce it at that time.
The news that Honda, Nissan and Mitsubishi were in talks over a possible merger broke just before Christmas last year. If completed, it would combine Japan’s second- and third-largest carmakers, and add the smaller Mitsubishi, in a defensive effort to join forces as the automotive industry goes through its biggest ever period of upheaval
Key events
Closing summary
Time to recap…
We’ll be back tomorrow, when the Bank of England is expected to cut UK interest rates at noon…. GW
FTSE 100 closes higher
Britain’s stock market has closed higher tonight, as shares recovered some of their losses from earlier this week.
The blue-chip FTSE 100 index has ended the day 52.5 points higher at 8623 points, heading back towards last week’s record highs.
Pharmaceuticals firm GSK was the top rises, surging 7.6% today after raising its sales target this morning (see earlier post). That’s its biggest daily rise since 2008!
US trade deficit widens
Donald Trump’s pledge to crack down on countries who treat the US badly by running a trade surplus may have backfired!
New data today shows that America’s goods and services deficit swelled to $98.4bn in December, up $19.5bn from the $78.9bn recorded in November.
The increase was driven by a rise in imports – which rose by $12.4bn to $364.9bn, perhaps as US companies tried to beat tariffs by shipping more goods into the country.
Exports fell by $7.1bn to $266.5bn, adding to the deficit.
2024 US Trade Deficit stands at $US 920 billion; an increase of 17% compared to 2023.
The deficit jumped in December 2024, as companies and consumers purchaed more foreign made goods before the 2025 Tariffs.
— Torek Farhadi 📮 (@TorekFarhadi) February 5, 2025
Dan Milmo
Ransomware payments fell by more than a third last year to $813m (£650m) as victims refused to pay cybercriminals and law enforcement cracked down on gangs, figures reveal.
The decline in such cyber-attacks – where access to a computer or its data is blocked and money is then demanded to release it – came despite a number of high-profile cases in 2024, with victims including NHS trusts in the UK and the US doughnut firm Krispy Kreme.
Ransomware payments last year fell from a record $1.25bn in 2023, said the research firm Chainalysis, which published the payment data on Wednesday. It said payments dropped off sharply in the second half of the year, reflecting the impact of action taken against cybercriminals and a refusal to pay.
UK borrowing costs lowest since December
Good news for Rachel Reeves! The UK government’s borrowing costs have hit their lowest levels since last December.
The yield, or interest rate, on UK 10-year gilts has dropped by 10 basis points (0.1 percentage point) to 4.424%, the lowest since December 16th.
Longer-dated borrowing costs are also falling, with UK 30-year gilt yields down 11 basis points to 5.013%, also the lowest since mid-December.
That means the jump in borrowing costs last month has been entirely wiped out. That jump had sparked much concern that the chancellor might break her fiscal rules unless she raises taxes or cuts spending.
The drop in UK bond yields follows a similar recovery in US borrowing costs today, which have dropped in the last few minutes after a survey of the US services sector showed growth slowed last month.
The Institute for Supply Management’s services PMI fell to 52.8 percent, down from 54 percent in December, showing slower growth.
The report shows that business activity, new orders and employment continued to rise across America’s services companies, but a falling PMI may encourage the US central bank to ease interest rates this year (or at least not put them up!).
US Postal Service restores delivery of incoming parcels from China and Hong Kong
The US Postal Service has reversed a decision to suspend international parcel deliveries from China and Hong Kong.
It has announced it will continue accepting incoming international parcels from China and Hong Kong, after saying late Tuesday night that it would suspend them.
Although no reason was given for the initial suspension of package deliveries from China, the Postal Service suggested Wednesday it was related to broad-based new tariffs imposed Tuesday and elimination of the de minimis exemption. This exemption had allowed anyone, including exporters, to ship packages worth less than $800 to the United States without duties or needing to undergo inspections. Inspecting incoming parcels to collect the new import taxes could prove extremely difficult.
“The USPS and Customs and Border Protection are working closely together to implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery,” the Postal Service said in a statement Wednesday.
Trading has begun on Wall Street in a muted fashion.
The Dow Jones industrial average rose by 12 points, or 0.03%, at the open, while the S&P 500 dipped by 0.2%.
The tech-focused Nasdaq fell 0.6%, dragged down by Google’s parent company, Alphabet, which is off 8% after missing Wall Street expectations last night.
Bain: M&A market poised for a comeback in 2025
Although the Nissan-Honda deal appears to be in serious trouble, 2025 could be a stronger year for M&A activity than 2024.
Consultancy firm Bain and Company’s annual global M&A report predicts that two of the fiercest M&A headwinds – the cost of capital and regulatory scrutiny – will ease this year, helping dealmakers.
They say:
Technology disruption, post-globalization, and shifting profit pools will drive dealmaking in the year ahead as interest rates and regulatory challenges are likely to recede.
The report shows that over the past three years, global M&A as a percentage of nominal GDP has hovered around the lowest levels in nearly 30 years:
Trade war fears could also drive mergers.
Bain say M&A will continue to be a big part of the response to the realignment of the global economic landscape, adding:
National economic interests are being reasserted through reviews of foreign direct investment and M&A activity on national interest grounds – and tariff policies, too.
To prepare for the second Trump administration’s proposed move to stiffen tariffs, executives are reevaluating global footprints to ensure access to attractive end markets and security of supply, which could prompt both acquisition and divestiture activity.
Artificial intelligence is also taking a bite out of M&A work. A Bain survey found one in three M&A practitioners will be using generative AI in dealmaking by the end of the year, and the company predicts gen-AI will enable every step of the M&A process in the next five years.
“Whatever you say about the automotive sector right now, it is not boring,” comments Russ Mould, investment director at AJ Bell.
He writes:
“After the week started with European carmakers staring down the barrel of tariffs from the Trump administration, there is now the news that Nissan’s merger with Honda is falling apart.
“Honda executing a three-point turn to propose Nissan becomes a fully owned subsidiary rather than bringing both names together under a jointly owned holding company means already fractious talks on the tie-up may have run out of road.
“Nissan’s negotiating position hasn’t been helped by its weak financial performance which has seen its market value plummet.
“Elsewhere, Toyota is in an acceleration phase after upgrading its full-year profit forecast and announcing plans to expand in China.
“While the West struggles with the transition to electric vehicles, China is pulling ahead in terms of adoption and Toyota has a bold plan to capture share in this market with plans to build a Lexus factory in Shanghai.
“Domestic electric vehicle makers have managed to undercut their global counterparts in China but Toyota clearly feels it can compete and, unlike some rivals, it has a strong balance sheet to underwrite its expansion strategy.
“The company has been well placed thanks to its focus on hybrid vehicles which are proving popular with motorists in the West beset with range anxiety about EVs, however there are signs this hybrid boom is starting to ease.”
US payroll growth beats forecasts
Employment at US companies picked up last month by more than forecast, an indication of resilient job growth.
Despite mounting geopolitical uncertainty. US private payrolls rose by 183,000 last month, beating forecasts of a 150,000 gain.
ADP Research also revised December’s payroll growth higher too, to 176,000.
Moana 2 helps Disney ride out hurricane disruption
The popularity of Moana 2 has helped Disney grow its revenues despite the disruption caused by a brutal hurricane season.
Disney has posted a 5% rise in its earnings in the last quarter – the three months to 28 December – with pretax profits up 27%.
Content sales and licensing returned to profit, with earnings up $536m to $312m “driven by the performance of Moana 2”.
But hurricanes Milton and Helene cost Disney $120m of profit.
The company says:
Domestic Parks & Experiences operating income declined 5%, reflecting a 9 percentage-point adverse impact to year-over-year growth due to the hurricanes and cruise pre-opening expenses
French carmaker Renault, which owns around a third of Nissan, says it will “vigorously” defend the interests of the group and its stakeholders.
A spokesperson for Renault added that recent press information indicates that no decision had yet been made on the possible end of merger talks between Honda and Nissan.
It was reported last week that Renault has urged Nissan to negotiate a higher premium from Honda in the merger.
