French carmaker Renault, Nissan Motor’s biggest shareholder, is open in principle to the Japanese automaker’s intention to hold merger talks with Honda Motor, two people familiar with the matter told Reuters.

The sources, who declined to be named due to confidentiality, said the French carmaker would consider all the implications of a merger to ensure they are protected its own interests.

Japanese auto giants Honda and Nissan are in talks to form a holding company, according to a person with knowledge of the matter, a move that could help them share more resources to face tough competition.

“In principle, Groupe Renault supports Nissan’s efforts to restore the business situation”a spokesman for the French automaker said Wednesday, but declined to comment on current merger talks.

The talks, first reported by Japan’s Nikkei newspaper, will allow Honda and Nissan to work more closely together on technology and better compete with other companies in terms of production electric vehicles, as market shares decline.

Nissan last month announced a $2.6 billion cost-savings plan that includes cutting 9,000 jobs and 20 percent of its global production capacity, as falling sales in China and the U.S. led to an 85 percent plunge in profits. the second quarter of the year.