The Japanese automobile giant Honda saw its stock soar by 16.10% to 1,482 yen, in a Tokyo market down 0.29%, Tuesday around 1:45 a.m. GMT (2:45 a.m. in Switzerland), after announcing that he was going to massively buy back his own shares. This announcement comes as the group opened negotiations on Monday with its struggling rival Nissan with a view to merging and creating the world number three in the sector, whose listing would begin in August 2026.
The manufacturer announced Monday evening, in a document sent to the stock exchange operator, that it intended to repurchase up to 23.7% of the shares previously issued by the group for a maximum amount of 1,100 billion yen (6.72 billion euros).
This amount corresponds to approximately 15% of Honda's market capitalization at the stock's closing level Monday evening.
Share buyback “very well received” by investors
The operation, which will begin in early January and end on December 23, 2025, “aims to improve the efficiency of the capital structure (of the company), implement a flexible capital strategy and strengthen the return for shareholders,” Honda said in the document.
“We will start with the largest share buyback possible at the moment,” Honda CEO Toshihiro Mibe told the press. “Even if we go to the maximum, we will still have a sufficiently solid financial base.”
This share buyback strategy “was very well received” by investors, because it is likely “to strengthen their returns”, via the revaluation of the stock price and dividends per share mechanically inflated with the reduction in the number of shares in circulation, commented experts from the financial daily Nikkei.
No fluctuation for Nissan
At the same time, Nissan was almost in balance on the Tokyo Stock Exchange (+0.18%) after having briefly plunged by 7% in the first exchanges: Honda assured Monday that for it it was not a question of “come to the rescue” of his compatriot in difficulties and very in debt.
And that the recovery of Nissan via its cost reduction plan was a prerequisite for the merger of the two manufacturers to materialize – a warning unlikely to reassure investors, worried for months about the economic solidity of Nissan, whose sales collapse in unison with its profit.
Finally, Mitsubishi Motors, a smaller Japanese manufacturer of which Nissan is the largest shareholder and which could also join the future merged entity, saw its stock rise by 0.38%.
