French automaker Renault SA, the biggest shareholder of the troubled Japanese automaker Nissan Motor Co, said that terminating the proposed Honda-Nissan merger was the right decision, according to a Bloomberg report.
This was because the terms of the transaction, “including the fact that it did not include any premium, were unacceptable,” the report quoted Renault as saying.
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Renault owns 36% of Nissan. As a result, it was seeking a premium on high priority for relinquishing control of Nissan.
Company representatives had voiced concerns last month in Japan on how the deal would be structured, according to the report.
While it was officially announced and understood as a merger, the terms would have ended up making the deal more of an acquisition of Nissan by Honda, according to the report.
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Honda would have taken the lead in forming the new merged entity and also would have nominated the majority of its directors.
The Honda-Nissan merger plan came about in the first place with both automakers looking to join their resources in an uncertain global market where Chinese electric vehicles (EVs) from brands such as BYD are becoming increasingly popular.
Nissan was ailing by then. It had seen a succession of troubles which began with the arrest and ouster of its former Chairman Carlos Ghosn in November 2018 for misrepresenting his compensation. The company is bracing for sizable losses this fiscal year.
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Renault has also voiced support for Nissan, stating that it welcomes its turnaround focus and added that it will continue providing support in joint alliance projects.