Top European auto maker Volkswagen is to examine "certain assets" of Malaysia's ailing Proton this month, a financial newspaper reported on August 05, indicating talks on a possible tie-up are on track.
The government here is currently in discussions with Germany's Volkswagen about a possible strategic alliance that would help save Malaysia's national carmaker. "Volkswagen is expected to conduct a due diligence on certain assets of Proton Holdings Bhd sometime this month," the Edge financial newspaper said, citing industry sources.
"It is understood that Proton's senior management has been informed of the exercise and has been instructed to facilitate and accommodate the due diligence as best as it can."
Proton needs foreign technical expertise to stem a sharp decline in market share and to cut losses. Previous reports have said Volkswagen may have agreed to pay cash for a 51 percent equity in a new company that will own key Proton assets. The Edge said VW would invest "a few hundred million ringgit" to jump-start the venture. Proton and Volkswagen met for a third time in Germany recently, after talks in Thailand and the United States.
State investment arm Khazanah Nasional is the controlling shareholder in Proton, with a 42.74 percent stake. State pension fund EPF and national oil firm Petronas own 12.07 percent and 8.84 percent respectively.
Khazanah's managing director Azman Mokhtar has set the end of this year as the "overall deadline" to clinch a deal. Proton last year lost its status as Malaysia's biggest-selling automaker to home-grown rival Perodua and recently reported larger-than-expected net losses of 591.36 million ringgit (172.4 million dollars) for the year to March 2007.
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