*

Honda ( HMC ) sounded out Nissan ( NSANF ) about becoming a subsidiary -

source

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Nissan ( NSANF ) opposed the Honda ( HMC ) proposal - source

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Nissan ( NSANF ) board to meet in near future - source

(Rewrites story with new sourcing)

By Maki Shiraki and Daniel Leussink

TOKYO, Feb 5 (Reuters) - Japan's Nissan ( NSANF ) may

call off its merger talks with Honda ( HMC ), according to a

person familiar with the matter, adding that Nissan's ( NSANF ) board

members were due to meet in the near future to decide a course

of action.

The development puts in doubt a tie-up that would create

the world's third-largest automaker by sales and raises fresh

questions about how hard-hit Nissan ( NSANF ) could ride out its latest

crisis without external help.

Reports of the merger talks ending sent shares of both

carmakers higher on Wednesday, with Honda ( HMC ) up more than 2% and

Nissan ( NSANF ) up 1.6% against a slight decline in Tokyo's Nikkei 225

index.

Honda ( HMC ), Japan's second-largest car maker, and Nissan ( NSANF ), its

third-largest, last year said they were in discussions to merge

their businesses, in what would mark a pivotal change for an

industry that faces a vast threat from China's BYD

and other new electric vehicle entrants.

But those talks have been complicated by growing

differences on both sides, according to two people familiar with

the matter, both of whom declined to be identified because they

were not authorised to speak to the media.

Nissan's ( NSANF ) board is due to soon meet to discuss calling

off the merger talks after Honda ( HMC ) sounded it out about becoming a

subsidiary, one of the people said, adding that such an

arrangement was a departure from the original spirit of their

discussions.

Honda ( HMC ), with a market value nearly five times bigger than

Nissan ( NSANF ), is increasingly worried about its smaller rival's

progress in its turnaround plan, said the other person.

Japan's Asahi Shimbun newspaper earlier reported that

the merger could be called off.

Spokespeople for both companies on Wednesday did not comment

on whether merger talks were off, but said they would make an

announcement in mid-February, as previously flagged.

Nissan ( NSANF ) has been hit harder than some other carmakers by the

shift to EVs, having never fully recovered after years of crisis

sparked by the arrest and ouster of former Chairman Carlos Ghosn

in 2018.

The tie-up talks have coincided with the disruption

posed by potential tariffs from U.S. President Donald Trump.

Tariffs against Mexico would be more painful for Nissan ( NSANF ) than for

Honda ( HMC ) or Toyota ( TM ), according to analysts.

Nissan's ( NSANF ) long-term alliance partner Renault

had said it would be open in principle to the merger with Honda ( HMC ).

The French automaker owns 36% of Nissan ( NSANF ), including 18.7% through

a French trust.