The combination of the three companies would create one of the world’s largest automakers, although the group would still be smaller than Japan’s Toyota Motor Corp. Joining forces could also strengthen their efforts to fend off Chinese manufacturers led by BYD Co., which is now among the world’s largest companies. leading manufacturers of electric vehicles.

Nissan’s top shareholder, France’s Renault SA, acknowledged the announcement by its longtime alliance partner, saying talks with Honda were still at an early stage.

Renault, which owns 36 percent of Nissan, also said in a statement that it will consider all options and continue to execute its strategy, which includes joint projects with Nissan.

Honda CEO Mibe said the combination with Nissan would generate billions of yen in incremental operating profit, though he did not provide a timeframe. The 63-year-old executive also did not address how companies would deal with pressing issues such as factory closures.

“Both companies will continue as wholly owned subsidiaries of the joint holding company with their respective brands in place,” Mibe said.

Honda’s share buyback replaces a previously announced plan to buy back ¥100 billion worth of shares from November 7 this year through October 2025. The big buyback is being launched now because Honda’s ability to repurchase shares is expected to be restricted during the lead-up period. to the deal the companies want to close in 2026.

Nissan has withered in the years since Ghosn’s ouster, squandering its position as an early contender in the shift to all-electric vehicles.

In China, the growing popularity of locally made electric vehicles has left some foreign brands struggling for survival. Honda and Nissan have had to cut staff and production, while Mitsubishi Motors has all but exited the world’s biggest car market.

Nissan has also been at the back amid a resurgence in the popularity of gas-electric hybrid cars in the US. While Toyota dominates the powertrain segment, Honda is relatively well positioned and could provide a welcome boost.

The combination of falling sales in the U.S. and China has been devastating for Nissan, prompting the company to cut thousands of jobs, reduce production capacity and cut its annual profit outlook by a 70%

“The partnership with Honda is not a sign that we are giving up on our plans to change Nissan,” Nissan CEO Makoto Uchida said on Monday.

Nissan was rescued from its last financial crisis more than two decades ago, when Renault came in with a cash injection and sent Ghosn to orchestrate a turnaround. The exiled executive weighed in on the deal talks from Beirut, telling Bloomberg Television last week that Nissan was in “panic mode.”

Speaking to the Foreign Correspondents’ Club of Japan via teleconference on Monday, Ghosn noted that Nissan’s unit sales have fallen more than 40% since 2018 and the automaker is barely breaking even.

Nissan’s Uchida and Honda’s Mibe said they knew nothing about Hon Hai Precision Co., the Taiwan-based iPhone maker known as Foxconn, that was interested in taking over Nissan.

People familiar with the matter said last week that Foxconn sent a delegation to meet with Renault in France. However, Foxconn has put its interest in pursuing Nissan on hold while negotiations with Honda unfold, one of the people said.

–With assistance from Craig Trudell and Chester Dawson.

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