According to a source reported by Asia Pulse, the German carmaker could sign a preliminary agreement to enable it to do a full fledged due diligence audit on Proton just before Christmas.
Volkswagen was reported earlier that it’s desperate in finding a new assembling partner and Proton has the advantage of Malaysia’s free trade agreement (FTA) with Japan to export Made-in-Malaysia Volkswagen cars to Japan by 2010. Under the FTA, Made-in-Malaysia cars above the 2000cc can be brought into Japan on a commercial basis without duty.
Volkswagen, which has come up with 20 new models this year, is said to be the preferred choice as it was the only party willing to pump in money, which should help the cash flow at Proton. Volkswagen is believed to be willing to commit as much as RM2 billion (US$563.7 million) to acquire a 51 per cent stake in Proton’s manufacturing arm.
Other parties that have expressed the same interest are PSA Peugeot-Citroen (EPA :
UG), Mofaz Sdn Bhd, Naza Group and DRB-HICOM Berhad (KLSE : DRBHCOM, stock-code : 1619). While PSA Peugeot-Citroen is only interested in forming a loose alliance, the other three local companies were said to have a slim chance on the tie-up possibility as they’re heavily involved in the local assembly – creating a conflict of interest scenario.
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December 12th, 2006 by financetwitter
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