Nissan Motor Co shares jumped after the Financial Times reported that a high-level Japanese group has drawn up plans to seek investment from Elon Musk’s Tesla Inc to aid the struggling automaker.
The group believes the electric vehicle (EV) maker is interested in acquiring Nissan’s plants in the US, the newspaper reported, citing people it did not identify.
The proposal envisions a consortium of investors, with Tesla as the largest backer, but also includes the possibility of a minority investment by Hon Hai Precision Industry Co (鴻海精密) to prevent a full takeover by the Apple supplier, the report said.
Photo: AFP
The group is being led by former Tesla board member Hiro Mizuno and supported by former Japanese prime minister Yoshihide Suga, the Financial Times reported.
Shares jumped more than 12 percent on the news of the potential investment.
A Nissan spokesperson declined to comment on the report. Tesla did not immediately respond to an e-mailed request for comment. Mizuno and a representative for Hon Hai did not immediately respond.
Nissan finds itself in need of a lifeline once again after a deal with Honda Motor Co to combine the two brands under a single holding company formally ended earlier this month. The fallout of the scrapped deal has been especially pointed for Nissan, which has seen weak sales, overcapacity, an outdated lineup of unpopular models and revolving-door leadership since the 2018 ouster of former Nissan CEO Carlos Ghosn.
That is putting pressure on the automaker to find support, and Nissan CEO Makoto Uchida has said it would be difficult to survive without leaning on a partnership.
Still, a deal with Tesla would be unexpected in part, because of the EV maker’s own struggles amid a market slowdown. Last month, it reported a drop in annual sales for the first time in more than a decade, and it has cut more than 10 percent of its workforce, including sales staff.
“For Tesla, it’s difficult to think there are any merits in buying Nissan,” Rakuten Investment Management Inc investment head Yasuhiko Hirakawa said. “It obviously has no need for legacy assets like engines and assembly lines. It’s difficult to imagine something Tesla needs that Nissan can offer.”
Despite Nissan’s challenges, its vast manufacturing operations and brand recognition are still enticing suitors.
Hon Hai has expressed renewed interest in Nissan after the deal with Honda collapsed, and Bloomberg News reported earlier this month that KKR & Co is weighing an investment in Nissan.
However, the carmaker continues to face risks from its restructure and the challenging geopolitical landscape. Moody’s Ratings on Friday cut its credit rating to speculative-grade and maintained a negative rating outlook.
“Whoever the buyer is, Nissan’s restructuring is unavoidable,” MCP Asset Management Japan strategist Rieko Otsuka said.
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