VW Taking Over Proton?
 

KUALA LUMPUR, Malaysia -- Shares of Malaysian national car maker Proton jumped as much as 8 percent Friday on speculation that Germany's Volkswagen AG will take control of the struggling automaker.

Khazanah Nasional Bhd., the government's investment arm that owns 42.7 percent of Proton, is in talks with the Wolfsburg, Germany-based automaker to sell up to 30 percent of the Malaysian company, according to a person familiar with the talks.

"The deal could be worth 10 ringgit a share," or $2.67, the person said on condition of anonymity due to the sensitive nature of the deal. At that price, the stake will cost VW some 1.65 billion Malaysian ringgit ($440 million).

The deal could come with management control of Proton, the person said.

Khazanah confirmed that discussions were being held on Proton's "proposed alliance with Volkswagen" but said it "does not have any plans at this point to divest all or part of its existing stake in Proton."

However, it said it is seeking ways to enhance shareholder value.

VW officials said Friday they were in talks about their cooperation and work with Proton and future plans, but were far away from any concrete solutions or decisions. They would not comment on the reports about a 30 percent stake.

Proton's domestic market share has drop from 57 percent in 1993 to around 30 percent in June as the government lifted protective tariffs on foreign-made cars due to a regional free trade agreement. The duties had earlier kept the prices of foreign cars artificially high, making Proton the only affordable cars for most Malaysians.

South Korea's Hyundai Motor Co. and Japan's Nissan Motor Co. have also chipped away at Proton's business by introducing locally assembled models at competitive prices.

Investors bid up Proton's stock on hopes that Volkswagen would help the company's ailing fortunes. Proton shares surged as high as 8.1 percent to 10 ringgit when the market opened Friday before falling back to 9.25 ringgit, up 1.1 percent from Thursday.

It wasn't immediately clear how a deal might be structured, but it is likely that Khazanah may want to retain a "golden share" in the company. Such shares, common in state-linked companies, give the government veto powers over key strategic decisions.

The possible equity sale followed Monday's removal of embattled chief executive Mahaleel Ariff, who has been at odds for months with Proton's board of directors over strategic issues such as the prospect of giving up majority control to a multinational manufacturer to counter foreign competition.

http://www.detnews.com/2005/autosins...tos-263926.htm

Imagine what will happen to lotus....

lotus will have a new 2-door sports car, 6 cylinders, +250 hp engineered and developed with VW money. It will cost around 60,000 usd.
but VW will have their new 2-door sports car , 6 cylinders, +250 hp and it will cost around 40000 usd :mrgreen:

same car, equipment, engine, etc. but subtle differences between the 2 cars.

Muahaha they just want Lotus and that brand new spanking proton factory (it can punch out like 1 million cars a year and the most advance car factory outside korea and japan in Asia). I'll bet they dont want to do anything with proton since they already got a brand for their cheap cars... Skoda.

Oh BTW, Lotus means Lots Of Trouble, Usually Serious. They are like MGRover, without the image problem.

Why bother with Proton, they should just wait till Proton die and get Lotus then and save a couple of million :idea:

Thats giong to be a long wait since it's a goverment company. Look at how long Fiat lasted with goverment support.

yeah and they happen to make some of the most fantastic cars in the world, and now with Toyota engines they are pretty reliable