Trading of DRB-Hicom shares suspended

Proton

PETALING JAYA: Trading in the shares of DRB-Hicom Bhd is suspended today to make way for a major announcement, amid speculation that it had found a foreign strategic partner for unit Proton Holdings Bhd.

It is believed that DRB-Hicom is preparing to sell a stake in Proton to Chinese automaker Zhejiang Geely Holding Group Co.

The deal could also involve a RM1.7bil grant and incentives from the government to Proton. The Government, early last year, had injected RM1.5bil in a soft loan into Proton to help with its cash flow. The loan came with several conditions, including for Proton to find a foreign strategic partner.

DRB-Hicom in February said it hoped to complete the search for a partner that would be able to help Proton compete in the international market by the middle of this year.

DRB-Hicom’s shares gained one sen to close at RM1.68 yesterday. The conglomerate is involved in the automotive, services, and property asset and construction businesses.

Quoting an unnamed source, Bloomberg reported yesterday that DRB-Hicom directors planned to discuss a proposal to sell a minority holding in Proton and a controlling stake in Proton’s Lotus Cars unit to Geely.

The report said as part of the proposal, Geely and Proton would tap each other’s networks to expand in their home markets of China and South-East Asia.

Meanwhile, French carmaker PSA Group is said to be interested in acquiring a majority stake in Proton. If a sale agreement were reached, it would mark the completion of a lengthy courtship between the Malaysian carmaker and foreign suitors.

Proton had in previous years reportedly considered proposals from Renault SA, Volkswagen AG’s Skoda unit and Suzuki Motor Corp. As early as 2010, the company was in partnership talks with Volkswagen, which ended with the German automaker citing “other priorities”. Honda Motor Co had also explored a tie-up with Proton in 2012.

DRB-Hicom said its aim was to complete the selection of the strategic partner by the first half of this year. The company also aims to maintain a “significant equity” in Proton.

DRB-Hicom took Proton private in 2012 after buying a 43% stake from state-owned investment firm Khazanah Nasional Bhd. The deal valued Proton at RM2.8bil.