(Bloomberg) -- Nissan Motor Co.’s stock surged as much as 24% Wednesday, the most in at least five decades, on hopes that a potential tie-up with Honda Motor Co. will save the Japanese automaker from financial crisis.
The stock was the top performer on Japan’s Nikkei 225 Stock Average, as investors welcomed the news for the ailing carmaker, whose shares had been performing their worst in 50 years under current leadership.
“Given that Nissan is set to get support from a financially and operationally stronger partner, this must be considered good news,” wrote Julie Boote, a senior analyst at London-based research firm Pelham Smithers Associates Ltd., in a note.
Honda is considering several options including a merger, capital tie-up or the establishment of a holding company, Executive Vice President Shinji Aoyama said on Wednesday following reports overnight of talks between the carmakers.
Mitsubishi Motors Corp., said to be a potential participant in the tie-up, also jumped, rising as much as 20% in its biggest rise since 2013.
Nissan Shares Surge on Possible Honda Merger News: Street Wrap
Honda’s shares, in contrast, fell as much as 3.4% on concern it will have to bail Nissan out. A tie-up would bring “no short-term benefits” to Honda, said Tatsuo Yoshida, a senior analyst at Bloomberg Intelligence.
The divergence in reaction was also seen in the credit market, with Nissan’s dollar bond spreads tightening by the most on record, while premiums on Honda’s credit default swaps surged, reflecting investor concern.
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