Proton Holdings Bhd, Malaysia’s national carmaker, rose the most in more than three weeks in Kuala Lumpur trading after a newspaper reported rival company DRB-Hicom Bhd submitted a bid to buy a stake in the company.
Proton rose as much as 5 per cent to RM4.20 and changed hands at RM4.12 at 11:55 am. DRB, controlled by Malaysian billionaire Syed Mokhtar Al-Bukhary, also rose to a three-week high. Malaysian sovereign-wealth fund Khazanah Nasional Bhd owns 42.7 per cent of Proton.
DRB-Hicom made a bid to purchase 32 per cent of the state- controlled carmaker, the daily reported October 10, citing a person familiar with the situation it didn’t identify. Proton, set up more than two decades ago as an emblem of industrialisation, had been in discussions with carmakers including Volkswagen AG for an alliance.
“We do not rule out potential local partners taking up strategic stakes in Proton,” Hafriz Hezry, an analyst at local brokerage AmResearch Sdn Bhd, wrote in a report today. Still, “we do not expect this to materialise any time soon.”
The automaker’s chairman Mohd Nadzmi Bin Mohd Salleh was unavailable for comment today. DRB-Hicom declined to comment. Khazanah senior vice president Mohd Asuki Bin Abas didn’t answer phone calls.
Write-Offs
A deal may be delayed “in view of huge investment write-offs faced by Khazanah should it relinquish its stake at current price levels,” analyst Hafriz wrote in his report. An agreement will come only after Proton concludes talks with a global automotive partner, wrote Hafriz, who rates Proton a “buy.”
Proton shares have more than doubled this year after slumping in each of the past two years.
DRB-Hicom, a car assembler and parts supplier to Proton, may face rival bids, including from Naza Group, the newspaper said. Proton may favor a management buyout, the report said, citing Mohd Nadzi.
The report comes after Malaysian Prime Minister Datuk Seri Najib Razak said on June 30 that government-linked investment companies should divest their holdings in industries that are “best taken by entrepreneurs.”
Proton has resumed talks with Germany’s Volkswagen, the paper reported on September 11. Malaysia’s government in 2007 ended alliance talks with Volkswagen and General Motors Co.
Protons, driven by taxi drivers across Malaysia, are among the cheapest cars on offer in the Southeast Asian nation. The carmaker was set up in 1983 by then-Prime Minister Tun Mahathir Mohamad. -- Bloomberg
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