Morningstar DBRS published a commentary following the announcement of the planned merger of Honda and Nissan by 2026.
Key highlights include the following:
— On December 23, Honda and Nissan announced plans to enter into a merger (the Merger) by 2026.
— The Merger announcement follows Nissan’s recent weak results and associated restructuring plans. Additionally, Chinese new energy vehicles continue to make significant inroads, not only in China but also across several export markets.
— Scale efficiencies, derived synergies, and cost reductions represent the most visible opportunities of the Merger; we note that diversification benefits are less obvious.
— A successful electrification strategy is key to the eventual success of the Merger. We note that increased scale itself does not assure success in the electric vehicle (EV) space.
“We note that credit rating implications resulting from the prospective Merger remain to be determined, pending further clarification from the companies regarding their eventual business strategies, notably including (among other items) future product plans in the key EV space,” said Robert Streda, Senior Vice President of European Corporate Ratings at Morningstar DBRS. “Additionally, indications of a financial policy and future financial targets resulting from the Merger would also influence future credit ratings; we note that both Honda and Nissan have both been historically highly conservative in this regard.”
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