Nissan Shares Surge 23% Following Reports of Potential Mega Merger with Honda

Forex - Nissan Motor shares rose following reports that the struggling Japanese automaker is looking to merge with Honda Motor to create a larger entity capable of competing with bigger rivals and investing more in the growing electric vehicle market.

Nissan shares were trading up 23.7% this morning, while Honda shares fell by 3%.

According to a report in the Nikkei newspaper, Honda and Nissan are considering operating under a holding company and are expected to sign a memorandum of understanding soon. The report also indicates that they aim to bring Mitsubishi Motors, in which Nissan holds a 24% stake, under the holding umbrella as well.

If the merger is successful, it would particularly benefit Nissan, which had previously announced plans to lay off 9,000 employees and cut global production capacity by a fifth due to intense competition in major markets.

Joe McCabe, President and CEO of AutoForecast Solutions, stated in an interview with CNBC on Wednesday that Nissan needs a "revival" following the deterioration of its relationships with Renault, noting that “[Nissan] did not hold a leadership position in any of the segments they compete in.”