Key Takeaways

Honda's ( HMC ) U.S.-listed shares popped Monday morning after the Japanese automaker and Nissan announced the signing of a memorandum of understanding (MOU) outlining their plans to merge in 2026.

The automakers plan to finalize the terms over the next several months and announce a definitive agreement in June 2025. A combined entity is expected to be listed on the Tokyo Stock Exchange in August 2026, the companies said.

Mitsubishi Possibly Included; Honda Launches New Buyback Plan

It's still undecided whether Mitsubishi—of which Nissan holds a stake—will be included in the merger . The three companies signed a separate MOU Monday to say Mitsubishi's inclusion will be decided by the end of January 2025.

Honda also announced a plan to buy back up to 1.1 trillion Japanese yen ($7 billion) worth of the automaker's own stock over the next calendar year, replacing a 100 billion yen ($636.3 million) plan announced last month.

While the sides said the merger would allow them to optimize their supply chain and manufacturing process to cut costs, Honda CEO Toshihiro Mibe "did not address how the companies would combine their businesses to face pressing issues like shutting or streamlining factories" at a joint press conference, according to Bloomberg.

Japanese regulators have not explicitly spoken about the Honda-Nissan deal, but Yoji Muto, head of the Ministry of Economy, Trade and Industry, said last Friday that the government "should take a favorable view when companies cooperate to strengthen their competitiveness," The Wall Street Journal reported.

Honda's U.S.-listed shares soared 15% in premarket trading Monday after entering the day down about 23% this year.

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