Honda Motor Co. and Nissan Motor Co have begun discussions on a potential merger, with plans to finalise an agreement by June, according to Japanese broadcaster NHK, citing an unnamed source.

The two automakers are reportedly exploring options such as a capital tie-up or the creation of a holding company. Nissan, in particular, is facing financial difficulties, with declining sales and profits in both the US and China prompting job cuts, reduced production capacity, and a 70% reduction in its annual profit forecast.

Board meetings for both companies are scheduled for Monday, followed by a press briefing, NHK reported.

Complications arose earlier when Taiwanese manufacturer Hon Hai Precision Industry Co, known as Foxconn, expressed interest in acquiring Nissan. However, Foxconn has temporarily halted its pursuit to observe the progress of negotiations between Honda and Nissan, according to a person familiar with the matter.

Bloomberg