Nissan engine Stocks rose sharply on Wednesday after media reports that the troubled Japanese automaker is seeking a merger Honda enginecreating a larger company that can compete with larger competitors and invest more in the growing electric vehicle market.

Nissan shares were last up 22%, while Honda shares fell 1.6%.

According to a report in Nikkei newspaper, Honda and Nissan are considering operating under a holding company and will soon sign a memorandum of understanding. They also try to bring something at some point Mitsubishi enginesAccording to the report, Nissan is the major shareholder among the holding company with a 24% stake.

If the merger is successful, it will be particularly beneficial for Nissan, as the company previously announced plans to cut 9,000 jobs and cut global production capacity by a fifth amid fierce competition in its key markets.

Joe McCabe, president and CEO of AutoForecast Solutions, told CNBC on Wednesday that Nissan needed a “revitalization” after its relationship with Renault went sideways.

“They (Nissan) had no leadership position in any of the segments they competed in,” he said.

In a statement, Nissan said media reports that it was “considering a business integration” with Honda were not based on an announcement from the company. Nissan said it is considering various options for future collaboration with Honda and Mitsubishi, but no decisions have been made yet. Shares of Mitsubishi had recently risen by 14%.

According to Nikkei, the combined Nissan-Honda-Mitsubishi company would be equivalent to more than 8 million vehicle sales annually. That would place the company among the world’s largest automakers, but still behind Japanese automaker Toyota Motor, with 11.2 million in 2023, and German automaker Volkswagen, which reported sales of 9.2 million vehicles last year.

The merger report follows the two Japanese automakers entering into a strategic partnership for shared automotive components and software earlier this year.

Such a merger would be the automotive industry’s largest merger since Fiat Chrysler merged with France-based PSA Groupe to form Stellantis in January 2021.

– Michael Wayland and Kevin Lim contributed to this report.