Photographer: Raymond Boyd/Getty Images

Geely Chairman Says He Plans to Abandon Bid for Lotus Owner

Updated on
  • Proton needs foreign strategic partner as loan condition
  • DRB-Hicom has said selection to be finalized by first half

Billionaire Li Shufu said he’s planning to pull Zhejiang Geely Holding Group Co. out of a bid for Proton Holdings Bhd., saying the Malaysian carmaker keeps changing its plans.

“They keep changing, today it’s this, tomorrow it’s that,” Li said in an interview in Beijing Friday, before attending the opening of the Chinese People’s Political Consultative Conference. “They haven’t decided what they want.”

Hangzhou, China-based Geely Group and France’s PSA Group have submitted bids to buy a stake in money-losing Proton, which needs to bring in a foreign partner to help in research and development as part of conditions it agreed to in order to receive a loan last year. Proton, now controlled by Malaysian tycoon Syed Mokhtar Al-Bukhary’s DRB-Hicom Bhd., was set up in 1983 by former Prime Minister Mahathir Mohamad to steer the Southeast Asian nation’s industrialization plan. Proton also owns British sports car maker Lotus Cars Ltd.

Proton Chief Executive Officer Ahmad Fuaad Bin Kenali declined to comment on Li’s comments. A representative for PSA reiterated an earlier comment that the group was “willing to go further” with Proton. PSA CEO Carlos Tavares said last week that a decision on the Proton bid is expected in spring.

DRB-Hicom shares fell 3.4 percent, the most since Jan. 3, in Kuala Lumpur. The company purchased Proton from Malaysian state investment company Khazanah Nasional Bhd. in 2012.

Past Suitors

A Geely pullout would leave PSA as the remaining suitor for Proton. The Paris-based maker of Peugeot and Citroen cars is closing in on a deal to acquire General Motors Co.’s Opel unit, with an agreement possibly coming early next week, according to people familiar with the matter. PSA also has plans to start producing and selling vehicles in India.

Geely and PSA are the latest in a long line of suitors for Proton, which is said to have 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. also explored a tie-up with Proton in 2012.

In April last year, Malaysia’s Trade Minister Mustapa Mohamed said Proton “needs to graduate” from government protection. The company’s share of the local auto market had declined to about 15 percent from a peak of 74 percent in 1993, he said.

Mustapa said at the time he was informed that “there were instances when Proton appeared to be unprofessional in its decision-making process” and the company needs to quickly identify a strategic foreign partner and be professionally managed.

The successful partner for Proton will be able to increase their production through the carmaker’s Tanjung Malim plant, which has a low utilization rate, according to DRB-Hicom in a Feb. 7 statement. The company also highlighted the lightweight platform technology owned by Lotus Cars as a benefit for a foreign partner.

DRB-Hicom has said that it aims to complete the selection of the strategic partner by the first half of this year. The company said it aims to maintain a “significant equity” in Proton, without specifying the level of ownership.

— With assistance by Ying Tian, En Han Choong, and Ania Nussbaum

(Adds background on Malaysian company in eighth paragraph.)
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