Sunday, January 21, 2007

GM may bid for stake in Malaysian firm

Thursday, January 11, 2007
GM may bid for stake in Malaysian firm
Associated Press

KUALA LUMPUR, Malaysia -- General Motors Corp. may bid for a stake in Proton, Malaysia's biggest automaker, which is seeking a strategic partner to help reverse its dwindling fortunes, a report said Wednesday.

Since late November, GM officials have met several times with Proton management and shareholders and may make an offer as early as this month, the Business Times quoted an unnamed industry executive as saying.

GM, the world's largest automaker, has proposed to take up a small stake at Proton's holding company as well as acquire a stake in Proton's manufacturing arm, the executive told the daily. GM's proposal includes helping Proton build a car for the U.S. market in five years, he said.

Malaysia is the biggest passenger car market in Southeast Asia. Gaining a stake in Proton will help GM, which has operations in Thailand, South Korea, India and China, consolidate its position as a key player in Asia's booming automotive market, the report added.

GM spokeswoman Renee Rashid-Meren told The Associated Press on Wednesday that the automaker "declined to comment on rumor and speculation."

The Malaysian government investment arm, Khazanah Nasional, which holds 43 percent of Proton, told the newspaper it was "unable to confirm or deny any specifics relating to this matter at this point in time."

Proton, which is losing money and market share amid mounting competition from local and foreign automakers, is expected to name a strategic partner for its manufacturing operations by March to help halt sagging sales and develop new models.

So far, the government has said it was talking only to Germany's Volkswagen AG and French automaker PSA Peugeot Citroen. Local companies Naza Group, Mofaz and DRB-Hicom are also lobbying to buy into Proton.

Analysts have said a foreign alliance, which can provide Proton with technology and access to the international market, was crucial to Proton's survival and restructuring plans.

Proton's losses are expected to widen after the company reported a 250.3 million ringgit ($71.5 million) loss in the three months ended September 2006 because of lower sales and rising costs.

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