Syed Mokhtar's DRB best fit for Proton: Dr M

Syed Mokhtar Al-Bukhary, Malaysia’s second-youngest billionaire,
received former Prime Minister Mahathir Mohamad’s endorsement to acquire
a controlling stake in automaker Proton Holdings Bhd.


DRB-Hicom Bhd, Syed Mokhtar’s auto assembler, is the best candidate
to buy the government’s 43 percent stake in Proton, Mahathir, now an
adviser at the carmaker he founded in 1983, said in a joint interview
yesterday in Putrajaya, outside Kuala Lumpur. Officials at DRB and
Khazanah Nasional Bh., 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
(US$314 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. Proton would add the owner of the Lotus
sports car brand to 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 Ratnam, an analyst in Kuala Lumpur. “He is
the adviser and founder of Proton, the company is still very close to
his heart even as he has retired.”






Proton advanced 6 percent to RM4.23 yesterday, extending its lead as the
best performer on the 100-stock FTSE Malaysia Index in the past month
to 57 percent. DRB-Hicom was unchanged at RM2.12.


General Offer


Should DRB seek to buy a 43 percent stake, it would be obliged to
make a general offer for Proton’s remaining shares under Malaysian
acquisition rules.


Syed Mokhtar, 60, is the Southeast Asian nation’s second- youngest
billionaire after Berjaya Corp. Chairman Vincent Tan, according to
Forbes magazine’s latest rankings. His ties to Mahathir, who describes
the Malaysian tycoon as a friend, stretch back more than a decade. About
a year before 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 Syed Mokhtar’s
MMC Corp.


DRB would be able to consolidate and expand its share of Malaysia
automotive market with a Proton acquisition, TA Securities’ 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.


Volkswagen Partnership


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, whose vehicles are driven by taxi drivers across Malaysia,
are among the cheapest cars sold in the country. The company, which had
two annual net losses over the past five years, is poised to see its
profit fall 51 percent in the year ending March, according to the
average of 13 analyst estimates compiled by Bloomberg.


Proton has been looking for a strategic partner to compete with
global automakers such as Toyota Motor Corp. Partnership 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, Syed Mokhtar’s DRB may be the best
fit, said Mahathir.


“DRB seems well-run,” 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.” -- Bloomberg