The Proton saga continues

26 Aug 2014 | Author: | Comments Off on The Proton saga continues
Proton Perdana

The Proton saga continues

the announcements on Proton’s seemingly sale — and even the likely — are coming from Dr Mahathir, who is an to Proton, rather than its shareholder — Khazanah, which has rather quiet throughout the

Written by Joanne Nayagam, The   

The Proton-DRB-Khazanah saga continued with Proton Holdings Bhd a statement saying that Nasional Bhd, “in its normal of business, it regularly receives enquiries and expressions of interests in to its various investments and companies it has interest in, including Proton. will make necessary at the appropriate time”.

Khazanah denied nor confirmed the rumour of the of its 42.7% equity stake in to DRB-Hicom Bhd.

This was the statement from Proton in a although it sent a clearer that something may be brewing at the carmaker.

On Dec 6, in a response to an article in The Proton had flatly denied any development. It announced to Bursa that “after making due with the board of directors and shareholders, the company is not aware of any for the unusual market activity in its and that there is no material development not previously disclosed”.

Meanwhile, DRB-Hicom did not acknowledge it is keen on buying into the carmaker. The conglomerate had last denied the speculation of it acquiring an stake in Proton.

Proton a strategic partner to ensure it in an increasingly competitive


announcement came after the made by former prime Tun Dr Mahathir Mohamad that “is likely to win the bid for Khazanah’s equity in Proton” on Monday.

Interestingly, the on Proton’s seemingly imminent — and even the likely buyer — are from Dr Mahathir, who is an adviser to rather than its major — Khazanah, which has been quiet throughout the episode.

The Edge weekly reported a week ago that Khazanah sell its stake in Proton to which also assembles for Suzuki, Mercedes-Benz and global car Volkswagen AG (VW).

It is a well-known that Khazanah has been for a suitor for its majority stake in in which the the former does not a board representative despite the major shareholder.

In 2006, VW was in purchasing Khazanah’s stake in but the plan hit a snag due to what said was nationalistic interest.

years later in 2009, approached Proton and submitted a bid to buy 32% of shares. Again, the talks for reasons unknown. Today, is not exactly in the pink of health.

net profit fell 76% to RM15.6 for 2QFY12 ended Sept 30 RM65.9 million a year due to higher expenses incurred by Group. Likewise, its 1HFY12 took a sharp 86.6% to RM20.1 million from million a year earlier.

As at Sept 30, Proton had RM1.31 in cash, bank balances and Its short-term and long-term borrowings 158% to RM959.1 million with RM371.2 million six earlier. Proton is in the second of a five-year turnaround plan for Group that costs million (RM2.35 billion).

if Khazanah didn’t sell its in 2006, one might wonder why the now, indeed? And why narrow the buyers to only a few local

Would it not be better to have a exercise open to global players as well? Limiting the of buyers will not get Khazanah the price, or a partner for Proton will ensure it thrives.

could definitely use a helping given its current weakening position, but certainly there be no rush to make a transaction of size and importance.

Recently, DRB-Hicom in an announcement to refuted claims that it is to secure a substantial stake in and would later divest of the stake to VW.

This wasn’t a denial of the possibility that it buy Khazanah’s stake and simply not it.

If VW had expressed interest in Proton years ago, surely it has ideas on how to turn the company Was it even approached now?

Proton Perdana

If is indeed interested in potential for its stake, the national sovereign fund should open up the in a more transparent manner for a period of time.

This is since Proton is currently below its book value per of RM9.81, net tangible assets per of RM7.62 as well as Khazanah’s cost of above RM8 per share.

Proton can rely on bigger players to not only invest in the national carmaker, but also to research and development (RD) something which DRB-Hicom can not

When contacted by The Edge Daily, Aberdeeen Asset fund manager Abdul Rasheed said: “A lot of the car manufacturing are owned by one company, where like RD are shared by all the different within the company”.

If a significantly auto player like VW to have a stake in Proton, the carmaker could stand to substantially from its RD capabilities.

in its heyday from the mid-1980s to the almost every Malaysian had a car.

Fast forward to and Proton is seeing a decline in its share, despite strong policies that result in taxes and Malaysia having of the highest car prices in the world.

to economies of scale and continuous in RD, there are plenty of foreign that are selling much cars, priced not much than Proton here and far overseas.

This is Proton’s biggest Jalil said the more question at this time is not if were to sell its Proton to DRB-Hicom, but if Proton can just by being Proton.

With all parties neither denying nor to the claims of the sale of Proton, it is anyone’s guess how the saga further develop.

Proton’s management is also said to expressed interest in a management with the proposal spearheaded by its Datuk Seri Mohd Mohd Salleh, and its CEO Datuk Syed Zainal Abidin Mohamad Tahir.

However, on a note for Proton, the group has some interest in its shares of

Yesterday, Proton closed at four sen higher than close.

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