Nissan's board is in the process of abandoning merger talks with Honda and could be open to other partners, a source close to the matter told AFP on Thursday and local media reported.

The discussions unravelled after Honda proposed to make its struggling rival a subsidiary instead of the plan announced in December to integrate under a new holding company.

"The latest conditions put on the table by Honda are unacceptable for Nissan... It was almost an affront," the source said, confirming information reported in Japanese media.

"It needs to be formalised, but basically, it's over."

The source said Nissan was "open" to forming other strategic partnerships within the automobile or technology sectors.

But the company "needs to be extremely creative, and reflect carefully on the synergies involved", they said.

Bloomberg also reported on Thursday that Nissan was looking for a new ally from the US-based tech sector, citing unnamed sources.

Nissan and Honda's intention to join forces - creating the world's third-largest automaker - had been seen as a bid to catch up with Tesla and Chinese electric vehicle firms.

Honda's CEO insisted in December that it was not a bailout for Nissan, which last year announced thousands of job cuts after reporting a 93 percent plunge in first-half net profit.

Nissan said Wednesday it would "establish a direction and make an announcement around mid-February" after reports said the company was walking away from the Honda talks.

Reports in December said Taiwanese electronics behemoth Foxconn had unsuccessfully approached Nissan to buy a majority stake.

It then reportedly asked Renault to sell its 35 percent stake in Nissan - a pursuit that was put on hold before the merger talks were announced.

The source said Thursday that Nissan's board of directors had agreed to abandon the talks on Tuesday.

Japanese news agency Kyodo meanwhile reported that Nissan's CEO Makoto Uchida met with Honda's chief Toshihiro Mibe in Tokyo on Thursday and conveyed his intention to terminate the merger talks, citing a source close to the matter.

'Need for a strong partner'

Nissan has weathered a turbulent decade, including the 2018 arrest of former boss Carlos Ghosn, who later jumped bail and fled Japan concealed in a music equipment box.

The company is also saddled with billions of dollars of debt that will reportedly mature over the next two years.

"I think Honda didn't want (the merger) any more, so they proposed something that was unacceptable," the source said.

"I mean, let's be serious: even if Nissan has problems... it's not in a situation where it can accept becoming Honda's subsidiary."

Market analysts at CreditSights said that "Nissan's need for a strong partner remains, but its negotiating position is impaired by its weak profit outlook and stock price."

They also pointed to a "the lack of clarity regarding progress and ultimate success of its turnaround initiatives" continues to impact Nissan's weak near-term profit outlook.

AFP