Khazanah selling Proton stake to DRB-HICOM

Monday December 12, 2011

LANGKAWI: Khazanah Nasional Bhd is selling its 42.7% stake in Proton Holdings Bhd to DRB-HICOM Bhd.

Proton adviser Tun Dr Mahathir Mohamad said that Khazanah was selling because it was not pumping more money into Proton, which needed funds for research and development work on new products such as hybrid cars.

“I worry about the buyer (DRB-HICOM) having enough money to inject into Proton.

The shares it will be buying are above market price, which will make profitability difficult,” Dr Mahathir said after delivering a speech at the MIDF Investment Forum organised by MIDF Amanah Investment Bank Bhd
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“But I believe in DRB-HICOM's ca-pabilities,” he said, adding that the status of Proton as a national car would remain after the sale.

On whether DRB-HICOM would sell its stake to Volkswagen AG, Dr Mahathir said he did not think so.

“DRB-HICOM only has a collaboration agreement with Volkswagen to locally assemble VW cars in Pekan, Pahang,” he said.

It has been reported that Khazanah had approached Sime Darby Motors, the Naza Group, Hyundai-Berjaya Sdn Bhd, DRB-HICOM and UMW Holdings Bhd.

So far, only DRB-HICOM had expressed interest in Khazanah's proposal.

Last week, DRB-HICOM issued a statement to the stock exchange denying any knowledge of a bid for Proton and of plans to sell a stake in Proton to Volkswagen.

Last Friday, Proton's share price put on 89 sen, or 24.6%, to close at RM4.50, amid talk that its largest shareholder, Khazanah, was divesting its stake in the national carmaker.
It was reported last week, quoting people who were invited to participate in the bidding process, that Khazanah would decide this month on selling its stake in Proton.
Proton, which owns sports car maker Lotus Group International Ltd, has been on the lookout for a strategic partner to help compete with bigger global carmakers such as Toyota Motor Corp, Volkswagen and Honda Motor Co.