Stock price of Malaysian auto maker Proton Holdings Bhd (KLSE :PROTON, stock-code : 5304) jumped 10 percent to a 13-month high today, Monday 15-Jan-2007, after a newspaper reported U.S. car giant General Motors Corp. (NYSE : GM, stock) planned to bid for Proton at a 56 percent premium to its market value.
The stock rose as much as 0.65 ringgit to 7.05 ringgit, its highest since Nov. 30, 2005. The Business Times said on Saturday GM was prepared to offer as much as 10 ringgit ($2.85) for each Proton share, valuing the Malaysian firm at $1.6 billion, provided the U.S. firm is given control of the finances of Proton and manages its vendor system.
The Malaysian daily, quoting sources familiar with GM’s operations in Malaysia, said the U.S. car maker planned to submit a bid for state-controlled Proton this week.
Malaysia’s Second Finance Minister Nor Mohamed Yakcop said on Friday initial discussions with various local and foreign suitors — including Germany’s Volkswagen (FRA : VOW) and France’s PSA Peugeot-Citroen (EPA : UG) — for a strategic stake in Proton have ended and the government was now evaluating the proposals and would make a decision soon.
Today however, Yakcop said though GM has shown interest in Malaysian auto firm Proton Holdings he did not say whether GM was keen on forging an alliance with Proton or taking a stake in the Malaysian firm.
Other local companies that have expressed interest in Proton includes Mofaz Sdn Bhd, Naza Group and DRB-HICOM Berhad (KLSE : DRBHCOM, stock-code : 1619). But most analysts believe local companies do not have any value-add which Proton is urgently seeking. And I believe the government will choose Volkswagen as the best available partner for Proton but why GM came into the picture the very last minute during which the government is finalizing the candidate? Is GM’s interest genuine considering it’s throwing a 10 ringgit offer? That’s 56% premium of the closing stock price of Proton last Friday. Maybe, just maybe, GM is trying to make Volkswagen’s life difficult by creating price uncertainties. I’m sure someone would have made some money with the jump in stock-price this morning.
finances of Proton and manages its vendor system.
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