Nissan Motor Co. ((7201T. NSANY ADR) and Honda Motor Co. (NYS: HMC) have signed a memorandum of understanding (MOU) to start discussions and considerations toward a business integration between the two companies through the establishment of a joint holding company. In effect this will be the merger of the two companies with Honda as the stronger member so to speak given Nissan’s perilous operating results It also raises questions about the continuance of Honda’s business ventures with General Motors.* What it does potentially do is create the world’s third largest automaker with annual sales of ~8-9 million, behind Toyota and struggling Volkswagen.

AutoInformed notes that as with all such complex multi-national corporate mergers, the details at the outset and more importantly in the final agreements and their implementation are key to its success. Given the twists and turns of the road and diverse corporate cultures of the participants – where there are no balance sheet entries to provide insights – this is an endurance race that makes the 24 hours of LeMans look like a 30-second TV spot. It also likely makes the venture subject to US SEC regulations, including form 4F and forward looking statements.**