DRB-Hicom to buy Proton

Article by Christian A., on January 16, 2012

Right after investors advised Proton to sell Lotus, it appears that the Australian manufacturer made a move. Today it was announced that billionaire Syed Mokhtar Al- Bukhary’s DRB-Hicom Bhd. agreed to buy a 43 percent stake in Proton for 1.29 billion ringgit ($410 million). According to Bloomberg, DRB-Hicom Bhd. will buy 234.7 million Proton shares, a 43 percent stake, for 5.50 ringgit apiece from state-owned Khazanah Nasional Bhd.

This means that the offer is 6.2 percent higher than the Malaysian carmaker’s last closing price. Same price will be extended to all remaining stockholders, according to the statement. Apparently, things don’t look good for Proton, as the manufacturer headed for its second year of profit declines. For those who don’t know, DRB-Hicom distributes and assembles vehicles for Volskwagen AG and Daimler’s Mercedes-Benz.

Due to Proton’s bad sales, DRB-Hicom will be able to widen his share of the Southeast Asian country’s car industry. The deal will give DRB control of two Malaysian car plants with the capacity to make a combined 350,000 vehicles per year. Malayan Banking will be the investment banking arm for the deal and was hired by DRB-Hicom and according to media reports, the company will use internal funds or borrow externally to fund the purchase.

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