The proposed deal was first reported by Japan’s Nikkei newspaper on Dec. 17. Nissan shares spiked following the initial report of a merger. Analysts say the potential tie-up is a result of financial underperformance at the company and of the ...

The proposed deal aims to unify operations under a joint holding company, led by Honda, while maintaining the distinct identities of each brand, according to Honda's president, Toshihiro Mibe. If finalized, the merger would position the combined entity to better compete with market leaders Toyota and Volkswagen.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.