Japanese automaker Honda announced plans to merge with Nissan, and its stock price surged as much as 17% following news of a share buyback program worth up to 1.1 trillion yen (approximately 10.2127 trillion KRW).
On the 24th, Honda's stock price closed up 12.22% on the Japanese stock market.
According to Bloomberg, Honda's stock price surged as much as 17% in the morning session, marking the largest increase since August.
Honda and Nissan announced their merger plans after the Japanese stock market closed the previous day. The two companies plan to establish a joint holding company aiming for a public listing in August 2026.
Additionally, Honda revealed plans to repurchase up to 24% of its issued shares as treasury stock from January 6 to December 23 next year. This move appears intended to alleviate shareholder concerns arising from the Nissan merger. Following the merger news on the 18th, Honda's stock price had fallen about 3% until the day before.
Tatsuo Yoshida, Senior Analyst at Bloomberg Intelligence, expressed surprise at the large-scale share buyback plan, stating that it signals "Honda is focusing on capital structure and stock price improvement."
However, some analysts believe the effect of the share buyback may not last long. Seiji Sugiura, Senior Analyst at Tokai Tokyo Intelligence Research Institute, said that as the risks of the merger with Nissan become clearer, the positive impact of this share buyback announcement is unlikely to endure. He added, "I don't understand why Honda made this decision before Nissan has even announced detailed restructuring plans. Considering the challenges Honda will face going forward, it is somewhat worrisome."
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