Tokyo, Japan:Honda shares soared more than 16 per cent on Tuesday after the Japanese auto giant announced a buyback of up to 1.1 trillion yen ($7 billion) the previous day.
The buyback announcement came as Honda and its struggling rival Nissan agreed on Monday to launch talks on a merger seen as a bid to catch up with Chinese companies and Tesla on electric vehicles. Honda will buy back its shares worth up to 1.1 trillion yen, or 23.7 per cent of the total issued shares, to improve "efficiency of its capital structure", the company said on Monday.
"Even with this amount, we are still a little short as an equity ratio adjustment, but we will start with the largest share buyback we can do at the moment," Honda CEO Toshihiro Mibe told reporters. "But even if we go that far, we still have a sufficiently strong financial base," he said.