Nissan shares slid, heading for a two-day drop of 13%, on concern that the terms of the carmaker¡¯s planned deal with Honda would give investors a lower stake in the proposed joint holding company.
The stock fell as much as 6.7% on Monday in Tokyo. After initially soaring more than 60% since Dec. 17, a day before news of the deal broke, the stock tumbled on Friday as investor focus turned to the starting ratio for a Honda-Nissan tie-up. Shares were also vulnerable to profit-taking on the last trading session of the year.
The ailing Japanese automaker aims to establish and list a joint holding company with Honda in August 2026, according to a Dec. 23 announcement. The exact terms of the arrangement are yet to be decided, but the share transfer ratio will take into account the carmakers¡¯ stock prices, according to the companies. A Nikkei report on Friday estimated the Honda-Nissan share ratio at 5:1.
Disappointment among investors who¡¯d been hoping for a ratio more favorable to Nissan may have triggered selling of its shares, said Kazuhiro Sasaki, head of research at Phillip Securities Japan.
¡°Investors are adjusting positions and taking profits before the year-end, and Nissan was bought up recently, so will be a part of that,¡± Sasaki said. Nissan¡¯s financial situation remains a concern among investors, he added.
Irrespective of the short-term boost the Honda deal news may have given to Nissan¡¯s share price, global fund positioning in the carmaker remains low, said Steven Holden, founder of Copley Fund Research.
¡°Sentiment is very bad,¡± said Holden. ¡°There¡¯s very little positive activity around Nissan, in terms of funds opening and closing positions.¡± Holden sees Nissan as one of the big losers in a worldwide trend away from automakers and toward big tech among global funds heading into 2025.
The broader Japanese stock market was also in profit-taking mode Monday, after five consecutive days of gains last week. The benchmark Topix index slid as much as 0.8% in the last trading session of the year, dragged by electronics and automakers. Nissan was the worst performer on the blue-chip 225-issue Nikkei stock average as of 3:24 p.m. in Tokyo.
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