Friday July 29, 2005
Volkswagen keen to acquire stake in Proton
BY JAGDEV SINGH SIDHU and B.K. SIDHU
PETALING JAYA: Proton Holdings Bhd and Volkswagen are said to be deep in talks for the German company to emerge with a substantial stake in the national car, which could be as much as 30%.
Sources said officials from both Khazanah Nasional Bhd, which is the biggest shareholder in Proton, and Volkswagen met at Proton’s headquarters yesterday.
However, a source said that if a deal could not be agreed upon in a matter of days, the talks would be called off.
Volkswagen is said to be keen to gain management control of the country’s first national car company.
The German company’s future involvement in Proton has been widely reported after it announced an alliance that would see Volkswagen assemble its cars at Proton’s plant in Tanjung Malim and jointly develop a low-cost car for the Asean region.
Following a briefing to analysts last week, Proton indicated that the alliance would be worked out over two phases, the first of which would see Proton assemble Volkswagen cars and distribute completely built-up Volkswagen cars in the Malaysian market.
A report said up to 300 compeletelt knocked down packs of the Volkswagen Passat would be assembled per month from the first quarter of next year.
The second phase involving joint product design and development, would probably require Volkswagen taking up a stake in Proton before it could kick off, it said.
Analysts have said that a more serious tie-up with Volkswagen was one way Proton could address the decline in its domestic market share, which had fallen to 40% at the end of June from 66% five years ago.
The AP meanwhile reported from Kuala Lumpur on Friday that Malaysia may sell up to a 30% stake in its national carmaker Proton to Germany's Volkswagen for US$440 million, according to a person familiar with the talks.
Khazanah Nasional Bhd., the government's investment arm that owns 42.7% of Proton, is in talks with the Wolfsburg, Germany-based automaker to sell up to 30% stake in the Malaysian company, the person said.
"The deal could be worth 10 ringgit (US$2.67; euro2.21) a share,'' the person said on condition of anonymity due to the sensitive nature of the deal, involving the national car maker.
At that price, the stake will cost Volkswagen AG some RM1.65 billion ringgit (US$440 million; euro364 million).
The deal could come with management control of Proton, the person said.
Khazanah and Volkswagen officials weren't immediately available for comment, the report said.
It's not immediately clear how a deal may 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. - AP
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