Nissan plans to pull out of merger discussions with Honda after the larger automaker proposed making it a subsidiary, a move Nissan opposes, according to media outlets citing sources familiar with the talks.
The two companies signed a memorandum of understanding (MOU) in December to explore forming a holding company, which would have created the world’s third-largest automaker.
However, discussions have hit a deadlock, with Nissan unwilling to proceed under Honda’s terms.
Nissan is expected to formalise its decision to withdraw from the talks at a board meeting next week, ahead of its third-quarter earnings announcement.
Honda has maintained that a merger would only happen if Nissan agreed to become a subsidiary.
Following the news, Nissan’s shares rose almost 8%, while Honda’s fell 4%.