| |
Filed
by Honda Motor Co., Ltd.
Pursuant
to Rule 425 under the U.S. Securities Act of 1933
Subject
Companies: Honda Motor Co., Ltd. (File Number: 001-07628) and
Nissan
Motor Co., Ltd. (File Number: 132-_____)
|
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%
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%
|
NATIXIS SA AS TRUSTEE FOR FIDUCIE NEWTON 701910 (Standing
proxy: Mizuho Bank, Ltd. Payment Sales Department) 22.8%
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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