Proton shares up on news of deal to sell Tanjung Malim plant stake

PETALING JAYA: Shares of Proton Holdings Bhd
picked up steam again, this time on news that the national car company
is in talks to sell up to a 50% stake in its Tanjung Malim plant to
US-based General Motors Corp (GM) for as much as RM800mil.
Its
shares hit an intra-day high of RM5.01 before closing up 8 sen to
RM4.90 at the close yesterday with over five million shares traded.
Citing
sources, a local business daily reported last week that GM, if it were
to acquire a stake in the national car company's plant, could invest
RM300mil worth of equipment in the factory.
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Last month, Bloomberg
reported that Proton and GM were in talks to form a manufacturing
venture in Malaysia, reviving negotiations that were scrapped in 2007.
The report said the talks were preliminary and might not lead to an
agreement.
An analyst, meanwhile, said the rise in Proton's share price yesterday was not surprising.
“With
all the news regarding the national car company, especially with the
possible takeover, any new information regarding the company will spark
investor interest and excitement to buy into Proton,” he said.
Analysts
were non-committal on whether they thought a deal would happen,
although they generally concurred that a partnership would benefit both
parties.
“For GM, a tie-up with Proton could help the former
expand its vehicle manufacturing operations in South-East Asia beyond
Thailand, which is still feeling the after-effects of one of the worst
floods in the country's recent history,” said an analyst from a local
bank-backed brokerage.
“A deal could also see Proton offering GM
cars at lower prices,” he said, adding that a tie-up with the
Detroit-based automotive giant would also provide Proton access to
foreign technology and help boost its sales overseas.
Another
analyst said it was vital for Proton to collaborate with a
globally-established original equipment manufacturer to enhance its
competitiveness.
“It's an old argument but Proton needs a strategic partner to compete in the global automotive arena,” he said.
According
to reports, Proton's Tanjung Malim plant, which produces models such as
the Persona, Gen.2, Savvy and Satria Neo, has an annual capacity of
150,000 cars. Proton's other cars are assembled in its Shah Alam plant.
Proton
shares have been on an uptrend in recent weeks, fuelled by reports that
Khazanah intends to dispose of its 42.7% Proton stake.
Companies said to be interested to buy Khazanah's stake included local automotive assembler DRB-HICOM Bhd, the Naza group and Sime Darby Bhd. Bloomberg had reported that GM was not interested in buying Khazanah's controlling stake.