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Thursday, January 27, 2011

'Proton-Perodua merger a distant possibility'

'Proton-Perodua merger a distant possibility'

The merger between Proton and Perodua is still a distant possibility, given the limited synergy and discomfort from Perodua's stakeholders, says MIDF Research.

On Tuesday, Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed said, the government would not force Proton and Perodua to merge, and any such move would be based on mutual agreement between the stakeholders.

According to MIDF Research, should the merger go through, Proton could resolve its excess capacity issues, streamline purchases with vendors, share research and development capabilities.

It would also enable Proton to spread its wings to the networks and good affiliates of Perodua, UMW and Daihatsu.

MIDF Research also contends that Perodua is less keen on a merger as its forte was in compact cars that would not use the same platform as Proton.

Both its affiliates also appear less keen on the merger as Proton could regain its throne in the market,lost to Perodua since 2006.

"There are some positive things happening for Proton such as the India ventures, but in the overall scheme of things, the company should trade sideways in the foreseeable future," the research house said in a research note.

MIDF Research has also set the new target price for Proton at RM4.80, 40 sen lower compared with its previous target of RM5.20, due to a series of negative newsflow.

The newsflow includes the termination of the Volkswagen talks, concerns over the RM2.4 billion capex needed for the Lotus turnaround plan and the reduced hope of a merger with Perodua.

At 12.10pm, Proton's share price declined one sen to RM4.49.



'Proton-Perodua merger won't be forced'


That's all folks, thanks for having the time and patience to read this blog entry.

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