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ARTICLE: Proton-VW deal off...

Proton-VW deal off, new directors to come in

May 28, 2010

KUALA LUMPUR, May 28 — Proton and German auto giant Volkswagen AG (VW) will not get into a partnership, contrary to speculation, but the national car maker is going ahead to appoint new directors to further its business abroad.

Sources told The Malaysian Insider today that Proton chairman Datuk Mohd Nadzmi Salleh will soon announce an end to talks for a tie-up with the German company. Speculation that Proton will strike a deal with VW has been growing after several years on the backburner when two previous attempts failed.

“The deal is off,” a source told The Malaysian Insider today.

Shares of Proton rose 27 sen to hit an intra-day high of RM4.71 but later settled to close RM4.67, a 5.18 per cent increase, yesterday after news of a possible tie-up with Germany’s Volksawagen AG. The market is closed today due to the Wesak celebrations.

Nadzmi said on Tuesday that there would be an announcement in the next two weeks but did not specify what that would be and noted that Proton did not need to form a tie-up.
“Hence, we do not rule out that for the time being, the anticipated tie-up may only be limited to contract assembly or a re-badging of the Passat as the Perdana replacement,” investment bank OSK said yesterday.

It is understood that VW would like to focus on its recent acquisitions — a stake in Japanese car maker Suzuki and its take over of sports and luxury car maker Porsche.

Proton also told Bursa Malaysia yesterday that independent non-executive directors Abdul Kadir Md Kassim and Oh Kim Sun had resigned from the board. It is understood that there could be a couple more resignations to pave way for new directors linked to the car maker’s business ambitions.

Oh is the Proton audit committee chairman while Abdul Kadir sits on the same committee.
The audit committee will now comprise current directors Datuk Michael Lim Heen Peok, Datuk Zalekha Hassan and Behara Venkata Rama Subbu, Proton said in a filing to the bourse.
Sources said the new directors will be able to further the company’s ambitions of going global, an idea that has been dampened by the lack of tie-ups with an international strategic partner.
Malaysian media had reported earlier this year that Proton was in ‘‘intense discussions’’ with global original equipment manufacturers on different types of collaboration.

Managing director Datuk Syed Zainal Abidin Salleh Mohamed Tahir said Proton was talking not only with VW but also with Mitsubishi and Renault for collaboration in engine and products.
In March, it was reported that PSA Peugeot Citroen and Mitsubishi Motors Corp ended talks about an equity tie-up and would instead concentrate on broadening their five-year partnership.
“Peugeot decided against buying a stake in Mitsubishi partly because of concerns that the plan would damage the French company’s debt ratings.

“What they could do is acquire a smaller company, such as Proton,” an analyst was quoted as saying by The Star today.

The national car maker, founded in 1983, has seen its shares trade between RM2.53 and RM5.03 in the last 52 weeks, rising RM1.63 to RM4.67 yesterday, a 53.62 per cent increase in the same period.

END OF SOURCE:

SOURCE: http://www.themalaysianinsider.com/business/article/proton-vw-deal-off-new-directors-to-come-in/

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