adapted from BBC news 16 Jan 2012
'New doors'
Analysts said the deal with DRB, which is very experienced in the sector, will bode well for Proton, as the former was expected to inject cash and boost production numbers at Proton's plants.
Malaysia's state-owned
investment firm Khazanah has sold its stake in carmaker Proton in one of
the biggest deals in the country's auto sector.
- Khazanah offloaded its 42.7% stake in for 1.29bn ringgit ($410m; £269m) to DRB-Hicom.
- DRB, owned by billionaire Syed Mokhtar Al-Bukhary, will have to make a mandatory offer for the remaining shares.
- DRB already assembles vehicles for Volkswagen and Mercedes Benz.
- "DRB-Hicom's proposal also demonstrated the company's extensive involvement in the automotive sector and its network of strategic partnerships, both local and international," Khazanah said in a statement.
- "DRB-Hicom's proposed strategy and business plan provides an effective platform to enhance Proton's sustainability and meet its long-term growth needs."
'New doors'
Proton has been struggling to keep hold of its dominance in Malaysia, thus the deal came. It has seen its
market share fall to 30% from more than 60% five years ago. The carmaker has been attempting to tie up with various
international manufacturers in the past few years to gain its popularity in the market again. There have been rumours of proposed tie-ups with Volkswagen and
General Motors. However, none of those have materialised into a formal
partnership.
Analysts said the deal with DRB, which is very experienced in the sector, will bode well for Proton, as the former was expected to inject cash and boost production numbers at Proton's plants.
"It's a fair deal. It bodes well and will open new doors for Proton," said Ahmad Maghfur of OSK Research.
"For DRB-Hicom, it will mean short-term pain for long-term gain."
'Strategic divestment'
The sale is the latest in a series of divestments that Khazanah has undertaken in recent years. The investment firm has also offloaded its stake in Pos Malaysia Berhad and Time dotCom Berhad. The company said it had been divesting controlling stakes in businesses that it sees as non-core and non-competitive assets. Khazanah's managing director, Azman Haji Mokhtar, said the
Proton deal was "another significant milestone in our strategic
divestment programme as it represents the largest in size to date". Mr Azman Haji Mokhtar added that the divestments were aimed at making government-linked companies become "stronger and more competitive".
