Dr. Mahathir backs Mokhtar’s Proton bid
Syed Mokhtar Al-Bukhary, Malaysia’s second-youngest billionaire, received former Prime Minister Mahathir Mohamad’s endorsement to acquire a controlling stake in carmaker Proton Holdings Bhd.
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Bloomberg
14 December 2011
Syed Mokhtar Al-Bukhary, Malaysia’s second-youngest billionaire, received former Prime Minister Mahathir Mohamad’s endorsement to acquire a controlling stake in carmaker Proton Holdings Bhd.
DRB-Hicom Bhd, Mr Syed Mokhtar’s car assembler, is the best candidate to buy the government’s 43 per cent stake in Proton, Dr Mahathir, now an adviser at the carmaker he founded in 1983, said in a joint interview on Monday in Putrajaya, outside Kuala Lumpur.
Officials at DRB and Khazanah Nasional Bhd, the government investment arm holding the Proton shares, weren’t immediately available to comment.
The support of the man who was Malaysia’s prime minister for two decades indicates DRB’s purchase of the stake - valued at RM993 million (S$406 million) at current prices - is imminent because of the former premier’s lingering influence, according to James Ratnam, an analyst at TA Securities Holdings Bhd here.
Proton would add the owner of the Lotus sports car brand to Mr Syed Mokhtar’s business empire, which includes ports, airports, and power plants.
‘Mahathir’s view and approval would be sought by Khazanah if it wants to sell Proton,’ said Mr Ratnam. ‘He is the adviser and founder of Proton, the company is still very close to his heart even as he has retired.’
Proton advanced one per cent yesterday to close at RM4.27 here, extending its lead as the best performer on the FTSE Bursa Malaysia 100 Index in the past month to 58 per cent. DRB- Hicom was unchanged at RM2.12.
Should DRB seek to buy a 43 per cent stake, it would be obliged to make a general offer for Proton’s remaining shares under Malaysian acquisition rules.
Mr Syed Mokhtar, 60, is the South-east Asian nation’s second-youngest billionaire after Berjaya Corp chairman Vincent Tan, according to Forbes magazine’s latest rankings. His ties to Dr Mahathir, who describes the Malaysian tycoon as a friend, stretch back more than a decade.
About a year before Dr Mahathir stepped down in 2003 as prime minister, he awarded a US$3.8 billion rail project - then the nation’s biggest infrastructure undertaking - to contractors including Mr Syed Mokhtar’s MMC Corp.
DRB would be able to consolidate and expand its share of Malaysia’s car market with a Proton acquisition, TA Securities’ Mr Ratnam said.
DRB manufactures, distributes, and assembles a range of vehicles from motorcycles to garbage trucks for brands including Suzuki, Mercedes-Benz, and Yamaha. It has eight assembly plants of which four are for cars, including one in Malaysia’s southern Malacca state where Hondas are made.
Selangor-based DRB began manufacturing its first Volkswagen AG Passat vehicles several weeks ago after signing a partnership agreement with the German carmaker last year.
Proton has been looking for a strategic partner to compete with global carmakers such as Toyota Motor Corp. Talks to form a partnership with Volkswagen, Europe’s largest carmaker, ended last year.
While Khazanah approached local companies Naza Group and Sime Darby Bhd about buying the Proton stake, Mr Syed Mokhtar’s DRB may be the best fit, said Dr Mahathir.
‘DRB seems well-run,’ Dr Mahathir said. ‘It is already producing cars for Suzuki, Mercedes, and Volkswagen. They have the capacity to turn around Proton and won’t undermine its vendors.’