Geely Chairman Says He Plans To Pull The Plug On The Bid For Proton Holdings

After leveling accusations on the Malaysian automaker company on the frequent changing of plans in regards to the future of Proton, billionaire Li Shufu says that Zhejiang Geely Holding Group Co. plans to pull the plug on the Proton Holdings Bhd bid. In an interview in Beijing, the billionaire said that Proton kept changing plans and it seemed like they have not decided on what they want.

The PSA group from France and Hangzhou and China-located Geely Group have brought forward their bids to get a chunk of the poor-performing Proton that is in need of a foreign partner that will assist in the research area, which was part of a loan agreement last year that they committed themselves to. Syed Mokhtar Al- Bukhary (Malaysian tycoon) is now in control of Proton which was established by the former Prime Minister Mahathir Mohamad with an intent of putting Southeast Asian’s industrialization plan in motion.

Ahmad Fuaad Bin Kenali, Proton’s CEO, reserved his comments on the matter. However, a PSA representative stated that the group was to carry on with the bid while last week Carlos Tavares-PSA CEO reiterated that a decision on the Proton matter should be expected by Spring.

The 3.4% DRB-Hicom share fall was the biggest one since January 3rd in Kuala Lumpur. 2012 saw the purchase of Proton from Khazanah Nasional Bhd by DRB-Hicom.

Past Potentials

PSA will be the only player left if Geely pulls out. The Paris-based automaker of Citroen vehicles and Peugeot is also looking to get the Opel Unit at General Motors with the fate of the deal to be known next week, according to sources close to the deal. PSA is also planning to enter the India Market with the intention of creating and selling affordable sports cars.

PSA and Geely have not been the only contenders for the Proton deal as it said that the company has had talks with Suzuki Motor Corp, Renault SA, Volkswagen AG’s Skoda etc. in the recent.

Mustapa Mohamed, Malaysia’s Trade Minister, said last year that it was time for Proton to fend on its own without the government’s protection. Proton’s shares in the local market have heavily dropped to almost 15% compared to 1993 when they were at the peak of 74%.

Through the utilization of Tanjung Malim’s plant, Proton’s incoming partner will be expected to enhance their production as DRB-Hicom views the plant’s utilization rate as low, according to a statement released on February 7th by the company.

The Malaysian carmaker predicts that they will have made the selection of a strategic partner in the first half of the year. Without revealing the specifics of the equity issue, DRB-Hicom stated that they’re keen on keeping significant equity to themselves.


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