(Bloomberg) — Nissan Motor Co. (NSANY) is pulling out of its deal with Honda Motor Co. (HMC) to combine both brands and regain global competitiveness, the Nikkei newspaper reported Wednesday.

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The Japanese carmakers had been negotiating the terms of a tie-up under which Honda would offer Nissan a lifeline by absorbing its struggling rival, and bring the two brands under a single holding company in 2026.

The two competitors failed to reach a consensus after seven short but tumultuous weeks of talks, according to the newspaper, which cited people it didn’t identify, bringing to a swift end what could have been a historic partnership for Japan’s auto industry.

Honda and Nissan are discussing various options, including the possibility of withdrawing from the deal, both companies said in separate statements filed with the Tokyo Stock Exchange. A framework for ongoing negotiations will be announced as planned, albeit delayed once already, in mid-February, according to spokespeople.

Friction emerged between the two this week after media reports said Honda floated the idea of a complete acquisition, a proposal that was met with strong opposition within Nissan.

The Tokyo exchange suspended trading of Nissan’s shares in response to the Nikkei report. Honda’s shares rose 8.2%, while Nissan fell 4.9%.

From the moment initial reports of a so-called merger surfaced in December, it was clear that Honda, with more than quadruple the market value, had the upper hand. When the two announced the deal in December, Honda made it apparent that Nissan had to implement a restructuring plan in order for any transaction to materialize.

An outdated product lineup, bloated dealership incentives and shaky leadership are just a few of the chronic issues ailing Nissan. Without Honda’s backing, it’s unclear how the brand plans to turn itself around.

“Both companies lack compelling EV offerings, and the combined entity would still face the challenge of building a new EV model pipeline,” said Vincent Sun, an analyst at Morningstar Inc. “It’s difficult for Nissan if they have to play a smaller role in the new entity rather than standing on an equal footing with Honda.”

The full picture of Nissan’s plight became clear in November, after a 94% drop in first-half net sales forced it to cut thousands of jobs, slash production capacity and lower its annual profit forecast by 70%.