Nissan reportedly tells Honda it will end merger talks

The CEO of Nissan Motor Co conveyed the company's intent to terminate merger talks with Honda Motor Co on Thursday, a source familiar with the matter said, signaling the end of an initiative that would have created the world's third biggest auto group.

Makoto Uchida met Honda CEO Toshihiro Mibe during a visit to the headquarters of Japan's second biggest automaker in Tokyo in the morning, the source said.

The Nissan board had tilted toward scrapping the negotiations after Honda recently floated the idea of Nissan becoming its subsidiary, a proposal that caused vehement opposition within the country's third biggest automaker, according to other sources.

Honda's proposal to make Nissan its unit, which deviates from its original plan to merge the two companies under a holding company in 2026, came as it grew impatient with what it views as Nissan's slow progress in turning around its business, the sources said.

At a December press conference unveiling the merger plan, Honda's Mibe said a key premise for the deal was Nissan ramping up turnaround efforts.

Nissan, which said it will cut 9,000 jobs worldwide and reduce its global production capacity by 20 percent after reporting a more than 90 percent drop in net profit in the April-September period, has not come up with a detailed restructuring plan that convinces Honda, the sources said.

The high-profile merger was widely regarded as an attempt by Honda to bail out Nissan, although the two companies reject such a characterization.

Nissan's Uchida stressed at the December press conference that neither company would have the upper hand in the merger and that they would be on equal footing.

The envisaged deal would allow the two companies to reduce costs and share the growing financial burden of developing electric vehicles and software to compete with global rivals like Tesla Inc and China's BYD Co.

Mitsubishi Motors Corp, Nissan's alliance partner which has not made clear whether it will join the merger talks, is leaning toward not participating due to an expected decrease in autonomy, according to the sources.