Japanese auto giants Honda and Nissan on Thursday confirmed they’d scrapped merger talks introduced in December, bringing an finish to a tie-up that will have created the world’s third-largest automaker.

The companies stated in a joint assertion that they “agreed to terminate the MOU (memorandum of understanding) signed on December 23 final 12 months for consideration of a enterprise integration between the 2 corporations.”

The companies’ intention to hitch forces had been seen as a bid to meet up with Tesla and Chinese language companies within the electrical car market.

Honda’s CEO insisted in December that it wasn’t a bailout for Nissan, which final 12 months introduced 1000’s of job cuts after reporting a 93 % plunge in first-half internet revenue.

Native media stories have stated the discussions unravelled after Honda proposed making its struggling rival a subsidiary as a substitute of the plan, introduced in December, to combine below a brand new holding firm.

Within the joint assertion, the automakers confirmed Honda “proposed altering the construction from establishing a joint holding firm … to a construction the place Honda can be the father or mother firm and Nissan the subsidiary via a share change.”

“On account of these discussions, each corporations concluded that, to prioritize pace of decision-making and execution of administration measures in an more and more risky market atmosphere heading into the period of electrification, it could be most applicable to stop discussions and terminate the MOU,” the assertion stated.

The cancellation of the merger talks will not impression the earnings of both automaker, it stated.

Honda reported a 7% decline in earnings Thursday for April-December, to 805 billion yen ($5 billion), whereas Nissan projected an annual internet lack of $518 million as a consequence of sagging gross sales for the 12 months ending in March. That will be a drastic reversal from a revenue of 426.6 billion yen ($2.7 billion) within the earlier 12 months. 

Mitsubishi Motors Corp. had stated it was mulling becoming a member of the Honda-Nissan mixture. A 3-way merger may have resulted in an organization value greater than $50 billion primarily based on their market capitalization in December.

The three automakers stated Thursday they might hold working collectively on electrical autos and sensible vehicles, resembling these with autonomous driving capabilities.

The three-way merger would have created The merger was estimated to be value greater than $50 billion.