Japanese automaker stocks Honda After that, they’re on track to have their best day in 16 years Announces buybacks of up to 1.1 trillion yen ($7 billion) Its shares sold off on Monday amid merger talks. Nissan.

Nissan Honda says they have started Formal negotiations to mergewhich could catapult them to the third-largest automaker in the world by sales.

Honda also announced that it will buy back 24% of its outstanding shares by December 23 next year. Its shares were last up 15.51%, which would be their best day since October 2008 if gains remain unchanged. Nissan shares fell more than 1%.

The Honda-Nissan deal will focus on sharing knowledge and resources, achieving economies of scale and creating synergies, Honda CEO Toshihiro Mibe said. Honda and Nissan will establish a holding company as the parent company and list the shares on the Tokyo Stock Exchange.

“The two companies operate in the same market, their brand images are very similar and their products are very similar,” Alagan Mobility Solutions chairman Hakan Dogu told CNBC on Tuesday.

“The new management faces the huge challenge of differentiating the product range and expanding the business,” he added.

Discussions will end in June 2025.

Nissan’s strategic partner Mitsubishi has been offered the opportunity to join the new group, with a decision expected by the end of January 2025.

Honda report Operating profit for the full year to March 2024 was 1.382 trillion yen, compared with Nissan’s 568.7 billion yen. The total value of these automakers will be close to $54 billion, with Honda’s market capitalization contributing $43 billion.

Analyst recommendations The potential merger stems from Nissan’s financial woes and the reorganization of its long-standing partnership with France’s Renault.

In its latest quarterly report, Nissan announces plans to cut 9,000 jobs and cut its global production capacity by 20%.

—CNBC’s Jenni Reid contributed to this report.