Honda Shares Jump After Announcing Plans of $7 Billion Buyback, Merger With Nissan

By Kosaku Narioka

Honda Motor shares surged after the company announced plans to merge with Nissan Motor in 2026 and to conduct a $7 billion share buyback next year.

Shares of Honda were recently up 17%, trading at 1,494 yen on Tuesday in Tokyo, while Nissan Motor shares were 0.2% higher at Y450.8.

Honda and Nissan announced after Monday's market close that they plan to set up a joint holding company, expected to be listed in Tokyo in August 2026, to merge their operations.

Honda also said it intends to repurchase its own shares worth up to Y1.1 trillion, equivalent to $7 billion, next year. This would allow the company to buy up to 24% of its outstanding shares, it said.

The automakers stated that Honda would nominate a majority of the directors for the combined company, and its top executive would come from Honda.

The companies aim to sign a definitive merger agreement in June 2025. If completed, the merger would create the world's third-largest automaker by sales trailing Toyota and Volkswagen.

The combination would strengthen the automakers against global challenges, including increasing competition from electric-vehicle makers such as Tesla and BYD.

Both Honda and Nissan have been struggling in China, the world's largest auto market, as the country rapidly shifts to electric and plug-in hybrid vehicles.

The companies described the merger as a move to improve efficiencies, with plans to share production lines, purchase the same parts in bulk and combine research and development projects.

However, the automakers face hurdles before finalizing the deal. They both sell similar sport-utility vehicles and sedans for the mass market in the U.S. and other regions.

Nissan's alliance partner Mitsubishi Motors said it would explore the possibility of participating in the merger and aims to make a decision by the end of January.

Write to Kosaku Narioka at kosaku.narioka@wsj.com