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Proton Gains After DRB Agrees to Acquire Malaysian Carmaker

Proton Gains After DRB Agrees to Acquire Malaysian Carmaker
Employees at Proton Holdings Bhd. work on the Saga vehicle assembly line at the company's factory in Shah Alam, Selangor, Malaysia. Photographer: Goh Seng Chong/Bloomberg

Proton Holdings Bhd., the Malaysian owner of Lotus sports car, climbed to the highest in more than four years in Kuala Lumpur trading after DRB-Hicom Bhd. agreed to buy a controlling 43 percent stake in the carmaker.

The stock rose as much as 5.6 percent to 5.47 ringgit, the highest since Oct. 2007, after billionaire Syed Mokhtar Al-Bukhary’s DRB said yesterday it agreed to buy the stake for 1.29 billion ringgit ($412 million), or 5.50 ringgit a share, from state-run investment fund Khazanah Nasional Bhd. It later closed at 5.41 ringgit.

Proton, which had two annual net losses over the past five years, paves the way for Syed Mokhtar to widen his share of the Southeast Asian country’s car industry and expand a business empire that already includes ports, airports and power plants. Selangor-based Proton gives DRB control of two Malaysian car plants able to make 350,000 vehicles per year, more than the total number of cars sold in Switzerland annually.

The “turnaround will take time,” Loke Wei Wern, an analyst at CIMB Group Holdings Bhd., wrote in a report today. “This is an opportunity for minority shareholders to exit the company.”

Proton investors should switch their holdings to DRB after holding out for the general offer, Loke said in the report.

HwangDBS Vickers Research Sdn. and AMMB Holdings Bhd. said in reports that investors should accept the general offer that will be extended to minority shareholders.

DRB distributes and assembles motorcycles to garbage trucks for global carmakers from Volkswagen AG to Suzuki Motor Corp. and Daimler AG’s Mercedes-Benz. The shares fell as much as 3.7 percent to 2.09 ringgit in Kuala Lumpur, before closing at 2.10 ringgit.

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