Hon Hai Precision Industry Co, the Taiwan-based iPhone maker known as Foxconn, has decided to suspend its interest in pursuing Nissan Motor Co, while the Japanese automaker is in negotiations over a potential merger with Honda Motor Co. Someone familiar with the matter.
The pause comes after Foxconn sent a delegation to meet Renault SA – which owns 36% of Nissan and would have a say in any partnership – in France, people familiar with the matter said.
But the smartphone maker, which has long-term ambitions to break into the electric car industry, is not giving up completely, preferring to see if the two Japanese brands are making legitimate progress towards a deal before deciding on its next move, the sources said. , requesting that his identity not be revealed while discussing private decisions.
Foxconn’s hiatus is the latest development in the unexpected emergence of two suitors for the struggling Japanese automaker, which is struggling to turn around sagging profitability and dwindling market share. Honda and Nissan, which have been flirting with a partnership for several years, appear to have accelerated work on a potential merger after Foxconn approached Nissan about buying the entire company.
It is not clear whether Nissan has engaged in substantive discussions with Foxconn, or has already rejected the Taiwanese company. But Foxconn will likely not be able to outbid or outbid Honda in the takeover battle, given the close local relations between Japanese companies.
Foxconn did not respond to requests for comment. A Renault media representative declined to comment.
A potential merger between Honda and Nissan would effectively consolidate the Japanese auto industry into two main camps and provide it with more resources to compete with its larger global peers after reducing the size of long-term partnerships with other automakers.
Nissan needs a partner to return it to a stronger financial position while intensifying restructuring efforts to deal with stalled revenue growth and declining profits. It faces pressure from an activist shareholder and a massive debt load that has led to speculation in the credit markets about its investment grade rating.
While its stock jumped 25% this week on news of a potential Honda merger, it is still down about 20% this year.