Lotus’s Incoming Malaysian Owner Says It’s Open to Selling Sports Carmaker
DRB Open to Selling Sports Carmaker Lotus
Goh Seng Chong/Bloomberg
Lotus vehicles are displayed at Proton Holdings Bhd.'s Centre of Excellence complex in Shah Alam, Selangor, Malaysia.
Lotus vehicles are displayed at Proton Holdings Bhd.'s Centre of Excellence complex in Shah Alam, Selangor, Malaysia. Photographer: Goh Seng Chong/Bloomberg
Malaysian billionaire Syed Mokhtar Al-Bulkhary’s DRB-Hicom Bhd. said it’s open to selling unprofitable sports-carmaker Lotus Group International Ltd. after taking over parent Proton Holdings Bhd. (PROH)
“We need to sit down with Lotus management, looking at their plans before arriving at a definitive decision,” Managing Director Mohd Khamil Jamil told reporters today in Selangor, outside of Kuala Lumpur. “We can’t do due diligence on Lotus earlier so will need time.”
Khazanah Nasional Bhd (KNBZ)., the Malaysian government’s investment arm, this week agreed to sell its controlling 42.7 percent stake in Proton to DRB-Hicom for 1.29 billion ringgit ($414 million). DRB also accumulated an additional 7.7 percent stake in the open market, according to an exchange filing yesterday, taking its total holding beyond the 50 percent threshold before its mandatory general offer.
“They should relook at all the businesses,” said Choo Swee Kee, who manages about 700 million ringgit as chief investment officer of TA Investment Management Bhd. in Kuala Lumpur. “They may have to restructure Lotus before you can sell it at a good price.”
Proton, which makes sedans and taxis, hasn’t made any profit from Lotus since acquiring the sports carmaker in 1996. The British manufacturer, which has struggled to compete against Porsche AG (PAH3) and Ferrari SpA in Europe, has hung on to relevance in the auto industry partly because of its decades-long expertise in designing lightweight frames.
DRB is “open to options,” Mohd Khamil said. “It has been there for years and has done some good things.”
Sale Speculation
Lotus’s sale has been the subject of speculation. Shanghai Automotive Industry Corp. (SAIZ) last month denied an Edge newspaper report that said China’s largest carmaker is interested in Lotus. Three months ago, Proton denied a report by the Star newspaper that it was selling its Lotus stake to Luxembourg-based Genii Capital.
DRB-Hicom (DRB) rose as much as 3.3 percent to 2.17 ringgit in Kuala Lumpur trading today. It pared gains to close at 2.11 ringgit, while the benchmark FTSE Bursa Malaysia KLCI Index (KLCI) fell 0.1 percent. Proton dropped 0.2 percent to 5.40 ringgit, shy of DRB’s 5.50 ringgit-a-share takeover offer.
DRB-Hicom plans to make Proton a subsidiary and delist the company after completing a general offer, Mohd Khamil said. DRB doesn’t plan to sell any stake in Proton to partners, though the company is open to collaboration with global car manufacturers like General Motors Co. (GM) and Volkswagen AG (VOW), he said.
DRB is holding talks with General Motors, Proton Chairman Mohd Nadzmi Mohd Salleh said on Jan. 6, while DRB already assembles vehicles for Volkswagen.
Malayan Banking Bhd. (MAY) will arrange loans to finance the purchase, Mohd Khamil said. DRB-Hicom’s financial position is “very healthy,” he said.
To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho in Tokyo at ycho2@bloomberg.net
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