Business

Proton stake takeover will affect national auto industry, say industry players

January 15, 2012

KUALA LUMPUR, Jan 15 — The planned takeover of Khazanah Nasional’s 42.7 per cent stake in Proton Holdings Bhd will have a deep impact on the national automotive industry, industry players have said.

According to a Bernama Online report, the decision on who will bid for Khazanah’s sizeable stake in Proton will be known early this week.

The report quoted unnamed sources within the automotive industry as saying that the new shareholder should continue to outsource the manufacturing of parts and components for Proton vehicles, which Proton has been doing since its inception.

“If the new shareholder has manufacturing units involved in manufacturing parts and components, they should divest these units or should not be involved in this area for Proton vehicles. There are a lot of vendors involved in the manufacturing of components and parts for Proton vehicles,” an industry source said.

Another source had said that Proton, being an Asian brand, needed someone who had deep knowledge of its business and not merely possess the financial capability.

“It’s the national car project. Proton needs a personal touch. You have to understand well the nature of the business of Proton. It’s an Asian brand,” he said.

He also said that the new shareholder must have an expansion plan for the export market of Proton.

Proton exported about 20,000 vehicles to 25 countries last year including the Middle East, Australia, and Asean countries.

But the national carmaker’s net profit fell to RM20.1 million in September 30 2011 from RM150.6 million in the previous corresponding period.

Net profit for second quarter was RM15.5 million compared with RM65.9 million in the second quarter of its previous financial year.

“If Khazanah wants to change partners for Proton, there will be a new leadership for the national carmaker. It should be transparent on the parties that it is negotiating with,” Bernama quoted another source as saying.

Malaysian automotive and property conglomerate DRB-Hicom Bhd said on January 9 it has submitted a bid for state investment arm Khazanah Nasional’s stake in national carmaker Proton Holdings Bhd .

“DRB-Hicom has always viewed Proton Holdings Berhad as an important automotive industry player and accordingly DRB-Hicom was on the look-out for when opportunity will arise to explore any viable proposal(s) which will benefit and add value to the group’s business and expansion plans,” DRB-Hicom said in response to a stock exchange query.

News reports had earlier quoted Proton adviser Tun Dr Mahathir Mohamad as saying Khazanah Nasional will sell its 42.7 per cent stake in Proton to DRB-Hicom.

Proton chairman Datuk Nadzmi Mohd Salleh has also openly indicated his interest in purchasing Khazanah’s controlling stake in the national carmaker, suggesting during a recent interview that Proton needs to sell part of its stake in Lotus, slash costs and increase exports to recoup some of its losses in the industry.

He is believed to be up against business tycoon Tan Sri Syed Mokhtar Albukhary for the bid.

 

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