Filed
by Nissan Motor Co., Ltd.
Pursuant
to Rule 425 under the U.S. Securities Act of 1933
Subject
Companies: Nissan Motor Co., Ltd. (File Number: 132-_____) and
Honda Motor Co., Ltd. (File Number: 001-07628)
December 23, 2024
Honda
Motor Co., Ltd.
Nissan
Motor Co., Ltd.
Notice of Execution
of Memorandum of Understanding regarding the Consideration of a Business Integration through the Establishment of a Joint Holding Company
(Joint Share Transfer) between Honda Motor Co., Ltd. (Securities Code: 7267) and Nissan Motor Co., Ltd. (Securities Code: 7201)
Honda
Motor Co., Ltd. (“Honda”) and Nissan Motor Co., Ltd., (“Nissan”; Honda and Nissan are collectively referred to
as the ”Companies”) have agreed to begin discussions and consideration toward a business integration (the “Business
Integration”) and have resolved at the boards of directors of each of the Companies to sign a memorandum of understanding regarding
the consideration of the Business Integration, which has been duly executed.
| 1. | Background
and Purpose of the Business Integration |
| (1) | Background
of the Business Integration |
Honda,
since its establishment in 1948, has developed, manufactured, and marketed motorcycles, automobiles, power products and compact aircraft
globally, under its founder’s ideals to “help with technologies for people.” It has also committed to realizing a society
with zero environmental impact and zero traffic collision fatalities under its philosophy of "Respect for the Individual" and
"the Three Joys" (the joy of buying, the joy of selling, and the joy of creating). This is guided by the company principle:
"Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide
customer satisfaction." By realizing the future mobility, Honda dreams of and a mobility society that people desire, while addressing
societal issues related to “environment” and “safety.” Honda aspires to chart a new trajectory of growth as a
comprehensive mobility company.
Nissan
has been involved in the manufacturing, sales, and related business of automotive products since its establishment in 1933. Guided by
its corporate purpose of "Driving innovation to enrich people's lives," Nissan has achieved substantial growth through its
diverse global operations, contributing positively to the economy. As a leading global automotive manufacturer, Nissan is committed to
addressing the challenges faced by society, placing a high priority on all stakeholders, such as customers, shareholders, employees,
and local communities. It remains dedicated to providing valuable and sustainable mobility solutions for the future.
As
the Companies engage in their respective businesses to address social challenges, it is essential to strengthen areas such as environmental
technologies, electrification technologies, and software development to further accelerate their efforts toward achieving a carbon-neutral
society and a zero-traffic fatalities society, the Companies signed a memorandum of understanding on March 15, 2024 regarding a strategic
partnership for the era of vehicle intelligence and electrification. Since then, the Companies have held discussions aimed at collaboration
in various fields.
Furthermore,
on August 1, 2024 the Companies signed a further memorandum of understanding to deepen the framework of the strategic partnership. The
Companies also announced that they had agreed to carry out joint research in fundamental technologies in the area of platforms for next-generation
software-defined vehicles (SDVs), particularly in the areas crucial for intelligence and electrification, to advance focused discussions
toward more concrete collaboration.
Throughout
the process, the Companies have engaged in discussions in consideration of various possibilities and options. At the same time, the business
environment for the Companies and the wider automotive industry has rapidly changed and the speed of technological innovation has continued
to accelerate. The memorandum of understanding between the Companies announced
today
is aimed to serve as an option to maintain global competitiveness and for the Companies to continue to deliver more attractive products
and services to customers worldwide.
| (2) | Purpose
of the Business Integration |
If
the Business Integration can be realized, the Companies can aim to integrate their respective management resources such as knowledge,
human resources, and technologies; create deeper synergies; enhance the ability to respond to market changes; and expect to improve mid-
to long-term corporate value. Additionally, the Companies can aim to further contribute to the development of Japan's industrial base
as a “leading global mobility company” by integrating the Companies’ four-wheel-vehicle and Honda's motorcycle and
power products businesses as well as other businesses, including aircraft, continue to make the brands of the Companies more attractive
and deliver more attractive and innovative products and services to customers worldwide.
| (3) | Potential
Synergies from the Business Integration |
The
Companies will aim to become a world-class mobility company with sales revenue exceeding JPY 30 trillion and an operating profit of more
than JPY 3 trillion by swiftly realizing synergy effects between the Companies resulting from the Business Integration. The potential
synergies expected at this stage are as follows. Going forward, the Companies will examine and analyze more specific synergies based
on discussions within the integration preparatory committee to be established by the Companies and the results of due diligence to be
conducted in the future.
| (i) | Scale
Advantages by Standardizing Vehicle Platforms |
By standardizing
the vehicle platforms of the Companies across various product segments, the Companies expect to create stronger products, reduce costs,
enhance development efficiencies, and improve investment efficiencies through standardized production processes.
The integration
is projected to increase sales and operational volumes, allowing the Companies to reduce development costs per vehicle, including for
future digital services, while maximizing profits.
By
accelerating the mutual complementation of their global vehicle offerings - including ICE (internal combustion engine), HEV (hybrid),
PHEV (plug-in hybrid), and EV (electric vehicles) models - the Companies will be better positioned to meet diverse customer needs around
the world and deliver optimal products, leading to improved customer satisfaction.
| (ii) | Enhancement
of Development Capabilities and Cost Synergies through the Integration of R&D Functions |
The
Companies have started joint research in fundamental technologies in the area of vehicle platforms for next-generation SDVs, which is
the cornerstone of the field of intelligence. The Companies are progressing efforts towards standardizing specifications and mutual supply
of key components such as batteries, which are crucial for EVs, and e-Axle, which is expected to be equipped in next-generation EVs.
After the realization of Business Integration, the Companies will encompass more integrated collaboration across all R&D functions,
including fundamental research and vehicle application technology research. This approach is expected to enable the Companies to efficiently
and swiftly enhance their technological expertise, achieving both improvements in development capabilities and reductions in development
costs through the integration of overlapping functions.
| (iii) | Optimizing
Manufacturing System and Facilities |
The
Companies anticipate that optimizing their manufacturing plants and energy service facilities, combined with improved collaboration through
the shared use of production lines, will result in a substantial improvement in capacity utilization leading to a decrease in fixed costs.
| (iv) | Strengthening
Competitiveness Advantage across the Supply Chain through the Integration of Purchasing Functions |
To
fully leverage the synergies from optimizing development and production capacity, the Companies intend to boost their competitiveness
by improving and streamlining purchasing operations and source common parts from the same the supply chain and in collaboration with
business partners.
| (v) | Realizing
Cost Synergies through Operational Efficiency Improvements |
The
Companies expect that the integration of systems and back-office operations, along with the upgrade and standardization of operational
processes, will drive significant cost reductions.
| (vi) | Acquisition
of Scale Advantages through Integration of Sales Finance |
By
integrating relevant areas of sales finance functions of the Companies and expanding the scale of operations, the Companies aim to provide
a range of mobility solutions, including new financial services throughout the vehicle lifecycle, to customers of both organizations.
| (vii) | Establishment
of Talent Foundation for Intelligence and Electrification |
The
human resources of the Companies are an invaluable asset, and establishing a strong human resource foundation is crucial for the transformation
that will come with the Business Integration. After the integration, increased employee exchanges and technical collaboration between
the Companies are expected to promote further skill development. Moreover, by leveraging each company's access to talent markets, attracting
exceptional talent will become more attainable.
| 2. | Summary
of the Business Integration |
| (1) | Method
of the Business Integration |
The
Companies plan to establish, through a joint share transfer (the “Share Transfer”), a joint holding company that will be
the parent company of both companies. This will be subject to approval at each company's general meeting of shareholders and obtaining
necessary approvals from relevant authorities for the Business Integration, based on the result of the consideration of the Business
Integration and the premise that Nissan's turnaround actions* are
steadily executed. The Companies will be fully owned subsidiaries of the joint holding company.
However,
should any procedural necessities arise regarding the Share Transfer or for any other reasons, the Companies may consult and agree to
modify the above structure in the future.
*
Nissan‘s actions to turnaround its performance and create a leaner, more resilient business capable of swiftly adapting to changes
in the market.
| (2) | Matters
concerning the Listing of the Joint Holding Company |
Shares
of the newly established joint holding company under consideration are planned to be newly listed (technical listing) on the Prime Market
of the Tokyo Stock Exchange (“TSE”). The listing is scheduled for August 2026.
In
addition, the Share Transfer will result in the Companies becoming wholly-owned subsidiaries of the joint holding company, and therefore
the Companies will become wholly owned subsidiaries of the joint holding company and will be scheduled to be delisted from the TSE. However,
shareholders of the Companies will continue to be able to trade shares of the joint holding company issued during this share transfer
on the TSE.
The
listing date of the joint holding company and the delisting date for the Companies will be determined in accordance with the regulations
of the TSE.
| (3) | Schedule
for the Business Integration |
| Board
of Directors Resolutions |
December
23, 2024 (Today) |
| Execution
of the Memorandum of Understanding |
December
23, 2024 (Today) |
| Execution
of a definitive agreement concerning the Business Integration |
June
2025 (Planned) |
Extraordinary
General Shareholders’ Meetings of the Companies
(Resolutions to approve the Share Transfer) |
April
2026 (Planned) |
| Delisting
from the Tokyo Stock Exchange (TSE) |
End
of July - August 2026 (Planned) |
| Effective
date of the Share Transfer |
August
2026 (Planned) |
(Note)
The above schedule is tentative and may change as a result of the consultation by the Companies. In addition, an announcement will be
promptly made if there arise reasons, such as procedures under applicable competition laws, to change the schedule of the Business Integration
process or to cancel the Business Integration itself.
| (4) | Details
of the Share Allocation in this Share Transfer (Share Transfer Ratio) |
The
share transfer ratio for the share transfer will be determined by the time of concluding the final definitive agreement regarding the
consideration of the Business Integration. The determination will be based on the results of due diligence, third-party valuations with
reference to the average closing prices of each company's shares over a certain period prior to the announcement of the memorandum of
understanding.
Furthermore,
Honda has retained Nomura Securities Co., Ltd. as its financial advisor, while Nissan has retained Mizuho Securities Co., Ltd. and BofA
Securities, Inc. as its financial advisors, for the consideration of Business Integration.
| (5) | Stock
Acquisition Rights and Bonds with Stock Acquisition Rights |
The
Companies have not issued stock acquisition rights or bonds with stock acquisition rights.
| (6) | Driving
Force of the Business Integration |
Aiming
for the smooth realization of the Business Integration, the Companies will establish an integration preparatory committee to conduct
focused discussions concerning the Business Integration.
| (7) | Management
Structure Following the realization of Business Integration |
At
the time of the effective date of the share transfer, it is planned that Honda will nominate a majority of each of the internal and external
directors of the joint holding company. President and representative director or president and representative executive officer of the
joint holding company will be selected from among the directors nominated by Honda.
Additionally,
the Companies plan to continue coexisting and developing the brands held by the Companies equally.
Other
details of the joint holding company, including the name, registered office, representatives, executive composition, and organizational
structure will be determined by the time of the execution of the definitive agreement, based on discussions and consideration aligned
within the purpose of the business integration at the upcoming integration preparatory committee, as well as the results of the due diligence.
Regarding
the organizational structure of the joint holding company, and the Companies which will become wholly-owned subsidiaries of the joint
holding company after the realization of Business Integration, the optimal structure for realizing synergies, including the integration
of R&D functions, purchasing functions, and manufacturing functions, will be discussed and considered within the integration preparatory
committee, with the aim of establishing an organizational structure that enables efficient and highly competitive business operations
after the Business Integration.
| (8) | Exclusive
Negotiation Rights |
The Companies
shall bear an obligation of exclusive negotiation, mutually prohibiting each other from engaging in acts that are contradictory to the
memorandum of understanding and acts that significantly hinder the achievement of the purpose of the Business Integration ("Competing
Transactions")
with any third party during the effective period of the memorandum of understanding. However, if either party receives a bona fide proposal
regarding a Competing Transaction from a third party and it is deemed that compliance with the exclusive negotiation obligation or failure
to consider, discuss, agree, or consent to such proposal would likely give rise to a specific risk of violation of the duty of care owed
by directors and others, the exclusive negotiation obligation may be exempted under certain conditions. Furthermore, if, as a result
of an exemption from the exclusive negotiation obligation, the party receiving a proposal for a Competing Transaction from a third party
agrees to or consents to that proposal, and the closing of such Competing Transaction is completed, that party shall be obligated to
pay the other party a cancellation fee of JPY 100 billion.
| 3. | Outline
of the Parties to the Share Transfer |
| (1) |
Company
name |
Honda
Motor Co., Ltd. |
Nissan
Motor Co., Ltd. |
| (2) |
Registered
office |
2-1-1,
Minami-Aoyama, Minato-ku, Tokyo |
2,
Takara-cho, Kanagawa-ku, Yokohama-shi, Kanagawa |
| (3) |
Title
and name of
representative
|
Toshihiro
Mibe,
Director, President
and Representative Executive Officer
|
Makoto
Uchida,
Representative Executive
Officer, President and Chief Executive Officer
|
| (4) |
Description
of
Business
|
The
Motorcycle business operations, Automobile business operations, Power Products business operations, and other business operations. |
Development,
production, and sales, of automobiles |
| (5) |
Stated
capital
(as of September
30, 2024)
|
86,067
million yen |
605,814
million yen |
| (6) |
Date
of establishment |
September
24, 1948 |
December
26, 1933 |
| (7) |
Number
of issued
and outstanding
shares
(as of September
30, 2024)
|
5,280,000,000
shares |
3,909,472,212
shares |
| (8) |
Account
closing
Date
|
March
31 |
March
31 |
| (9) |
Number
of employees
(as of March 31,
2024)
|
194,993 |
133,580 |
| (10) |
Major
suppliers |
Hitachi
Astemo, Ltd.
Denso Corporation
STEEL CENTER CO.,
LTD.
TS TECH CO., LTD.
Sumitomo Electric
Industries, Ltd.
TACHI-S CO., LTD.
Panasonic Automotive
Systems Co., Ltd.
AISIN CORPORATION
Hitachi Astemo Ueda
Ltd.
Mitsubishi Electric
Corporation
|
Marelli
Corporation
Hitachi Astemo,
Ltd.
Faurecia-Nippon
Seiki Co., Ltd.
Panasonic Automotive
Systems Co., Ltd.
Denso Corporation
Sumitomo Electric
Industries, Ltd.
Bosch Corporation
Yazaki Corporation
Topre Corporation
Koito Manufacturing
Co., Ltd.
|
| (11) |
Main
financing banks |
MUFG
Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Saitama Resona Bank,
Ltd.
|
Mizuho
Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
|
| (12) |
Major
shareholders and ownership percentage
(as of September
30, 2024)
|
The
Master Trust Bank of Japan, Ltd. (Trust Account) 16.81%
Custody
Bank of Japan, Ltd. (Trust Account) 6.65%
Moxley and Company
(Standing proxy: MUFG Bank, Ltd.) 5.55%
|
NATIXIS
SA AS TRUSTEE FOR FIDUCIE NEWTON 701910 (Standing proxy: Mizuho Bank, Ltd. Payment Sales
Department) 22.8%
|
| |
|
State
Street Bank and Trust Company 505001 (Standing proxy: Mizuho Bank, Ltd.) 2.97%
Meiji Yasuda
Life Insurance Company (Standing proxy: Custody Bank of Japan, Ltd.) 2.95%
JPMorgan Securities
Japan Co., Ltd. 2.14%
State Street
Bank West Client - Treaty (Standing proxy: Mizuho Bank, Ltd.) 1.99%
Nippon Life Insurance
Company (Standing proxy: The Master Trust Bank of Japan, Ltd.) 1.72%
JP MORGAN CHASE
BANK 385781 (Standing proxy: Mizuho Bank, Ltd.) 1.49%
AXA Life Insurance
Co., Ltd. 1.22%
|
Renault
S.A. (Standing proxy: Mizuho Bank, Ltd. Payment Sales Department) 16.3%
The Master Trust
Bank of Japan, Ltd. (Shintaku-guchi) 8.6%
J.P. MORGAN SE
- LUXEMBOURG BRANCH 381648 (Standing proxy: Mizuho Bank, Ltd. Payment Sales Department) 3.2%
Suntera (Cayman)
Limited as trustee of ECM Master Fund (Standing proxy: GOLDMAN SACHS JAPAN CO., LTD.) 2.5%
Custody
Bank of Japan, Ltd. (Shintaku-guchi) 1.6%
State Street
Bank West Client - Treaty 505234 (Standing proxy: Mizuho Bank, Ltd. Payment Sales Department) 1.2%
Nippon Life Insurance
Company (Standing proxy: The Master Trust Bank of Japan, Ltd.) 1.0%
Moxley and Company
(Standing proxy: Mizuho Bank, Ltd. Payment Sales Department) 0.9%
The Nomura Trust
and Banking (Shintaku-guchi) 0.6%
|
| (13) |
Relationship
between companies |
| Capital |
None |
| Personnel |
None |
| Transactional |
None |
| Status
as a related party |
None |
| (14) |
Operating
results and financial condition for the last three fiscal years
(Figures are millions
of yen unless otherwise indicated)
|
| |
Honda
(IFRS) |
|
Nissan
Motor (JGAAP) |
Fiscal
year ended
March 2022
|
Fiscal
year ended
March 2023 |
Fiscal
year ended
March 2024
|
Fiscal
year ended
March 2022 |
Fiscal
year ended
March 2023
|
Fiscal
year ended
March 2024 |
| Equity
attributable to owners of the parent |
10,472,824 |
11,184,250 |
12,696,995 |
Consolidated
net assets |
5,029,584 |
5,615,140 |
6,470,543 |
| Total
liabilities and equity |
23,973,153 |
24,670,067 |
29,774,150 |
Consolidated
total assets |
16,371,481 |
17,598,581 |
19,855,151 |
| Equity
attributable to owners of the parent per share (yen) |
2,040.77 |
2,239.98 |
2,629.37 |
Consolidated
net assets per share (yen) |
1,170.17 |
1,310.74 |
1,599.28 |
| Sales
revenue |
14,552,696 |
16,907,725 |
20,428,802 |
Sales
revenue |
8,424,585 |
10,596,695 |
12,685,716 |
| Operating
Profit |
871,232 |
780,769 |
1,381,977 |
Consolidated
operating profit |
247,307 |
377,109 |
568,718 |
| |
- |
- |
- |
Consolidated
ordinary profit |
306,117 |
515,443 |
702,161 |
Profit
for the year attributable to:
Owners of the parent
.
|
707,067 |
651,416 |
1,107,174 |
Profit
for the year attributable to owners of the parent |
215,533 |
221,900 |
426,649 |
| Basic
earnings per share for the year (attributable to owners of the parent) (yen) |
137.03 |
128.01 |
225.88 |
Earnings
per share attributable to owners of the parent (yen) |
55.07 |
56.67 |
110.47 |
| Dividends
per share (yen) |
120.00 |
120.00 |
126.00 |
Dividends
per share (yen) |
5 |
10 |
20 |
| (Note 1) | Honda has adopted International Financial Reporting Standards (IFRS) for its consolidated
financial statements. Honda has omitted the disclosure of "Consolidated ordinary profit"
as there are no corresponding items. |
| (Note 2) | Honda conducted a three-for-one stock split of its common shares, with the record date of
September 30, 2023, and the effective date of October 1, 2023. The equity attributable |
to owners
of the parent per share and basic earnings per share for the year (attributable to owners of the parent) for the year are calculated
under the assumption that the stock split occurred at the start of the fiscal year ended March 2022. For the dividends per share, the
interim dividend amount for the fiscal year ended March 2024 was JPY 87, before the stock split, and the year-end dividend amount was
JPY 39, after the stock split, resulting in a total annual dividend amount of JPY 126.
The Companies may
file a registration statement on Form F-4 (“Form F-4”) with the U.S. Securities and Exchange Commission (the “SEC”)
in connection with the possible Share Transfer pertaining to the Business Integration between the Companies, if it is conducted. The
Form F-4 (if filed in connection with the Share Transfer) will contain a prospectus and other documents. If a Form F-4 is filed and declared
effective, the prospectus contained in the Form F-4 will be mailed to U.S. shareholders of the Companies prior to the shareholders’
meetings at which the Share Transfer will be voted upon. The Form F-4 and prospectus (if the Form F-4 is filed) will contain important
information about the Companies, the Share Transfer and related matters. U.S. shareholders of the Companies to whom the prospectus is
distributed are urged to read the Form F-4, the prospectus and other documents that may be filed with the SEC in connection with the
Share Transfer carefully before they make any decision at the respective shareholders’ meeting with respect to the Share Transfer.
Any documents filed or furnished with the SEC in connection with the Share Transfer will be made available when filed, free of charge,
on the SEC’s web site at www.sec.gov. In addition, the documents will be mailed to any shareholder of Honda or Nissan upon request
for free of charge. To make a request, please refer to the following contact information.
| Honda
Motor Co., Ltd. |
Nissan
Motor Co., Ltd. |
2-1-1,
Minami-Aoyama
Minato-ku, Tokyo 107-8556
Japan
|
1-1,
Takashima 1-chome
Nishi-ku, Yokohama,
Kanagawa, 220-8686
Japan
|
| Attention:
Masao Kawaguchi |
Attention:
Julian Krell |
| Head
of Accounting and Finance Supervisory Unit |
Vice
President, IR Department |
| (Tel.
+81-3-3423-1111) |
(Tel.
+81-45-523-5523) |
FORWARD-LOOKING STATEMENTS
This
document includes “forward-looking statements” that reflect the plans and expectations of the Companies in relation to, and
the benefits resulting from, the Business Integration and the potential benefits that may be realized through it. To the extent that
statements in this document do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking
statements are based on the current assumptions and beliefs of the Companies in light of the information currently available, and involve
known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the actual results, performance,
achievements or financial position of one or the Companies (or the group after the Business Integration) to be materially different from
any future results, performance, achievements or financial position expressed or implied by these forward-looking statements.
The
Companies undertake no obligation to and have no intention to publicly update any forward-looking statements after the date of this document.
Investors are advised to consult any further disclosures by the Companies (or the group after the Business Integration) in their subsequent
filings in Japan and filings with the SEC pursuant to the U.S. Securities Exchange Act of 1934.
The
risks, uncertainties and other factors referred to above include, without limitation:
| ・ | changes
in the economic situation, market demand, and competitive environment surrounding the automobile
market in and outside Japan |
| ・ | financial
uncertainty domestically and internationally, or changes in other general economic or industry
situation |
| ・ | interest
rates and other market risks |
| ・ | changes
in the credit ratings of the Companies |
| ・ | changes
in laws and regulations (including environmental regulations) related to the business activities
of the Companies |
| ・ | increases
in tariffs, introduction of import regulations, and other changes in the major markets of
the Companies |
| ・ | failure
to finalize the definitive agreement(s) concerning the Business Integration |
| ・ | delays
in the review or approvals from relevant authorities needed for the Business Integration,
or failure to obtain such approvals from relevant authorities |
| ・ | the
possibility of not being able to realize the synergies or added value expected from the Business
Integration, or achieving such realizations become difficult; and |
| ・ | other
risks associated with completing the Business Integration. |
End
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