Petronas Becomes Largest Shareholder in Proton, Finally
After an unusually long period of negotiation, the purchase of HICOM’s stake in Proton by Petronas was finally completed on December 4th 2000. The transaction saw the transfer of HICOM’s 25.8% equity (comprising 25.13% held by Universal Trustees (M) Bhd for HICOM and HICOM’s own 0.69% equity) in Proton being sold to Petronas for RM981,015 million. This follows the agreement signed in March 2000. The price had been arrived at following negotiations with HICOM on a ‘willing buyer, willing seller’ basis and after taking into account the valuation report prepared by the independent valuer, Dresdner Kleinwort Benson, jointly appointed by the two parties in April 1999.
Additionally, Petronas also bought over another 1.37% equity in Proton which was held by Perecom Industries Sdn Bhd, a wholly-owned subsidiary of HICOM. This means that Petronas is now the single largest shareholder in the national car company with a total equity of 27.17%. It is likely that there will be a few top management changes with Petronas-appointed executives taking charge of Proton.
With no changes in the equity structure other than the change to Petronas, the other substantial shareholders are the government’s investment arm, Khazanah Nasional Bhd (17.96%); KWSP/EPF (11.02%); and Mitsubishi Motors Corporation/Mitsubishi Corporation (16.06%). Mitsubishi’s shares are held in equal parts through Citicorp Nominees (Asing) Sdn Bhd and Cartaban Nominees (Asing) Sdn Bhd.
In November, Proton itself had also completed the acquisition of Usahasama Proton DRB Sdn Bhd (USPD), taking over the 70% equity held by DRB-HICOM in the distribution company which was established in 1995. As a second distribution channel for Proton products, USPD was given the sportier models such as the Aerobacks, Satria, and Satria GTI to sell exclusively. It was also the distributor for the Citroen AX-based Tiara which is no longer being produced, and is jointly distributing the Waja with EON. It is believed that USPD will be renamed Proton Distribution or Edaran Proton in the near future and that a general manager from Proton will head the company.
The long-awaited acquisition of EON by Proton seems to be going nowhere as both parties have not been able to come to terms on the price. On its part, DRB-HICOM is not in a hurry to sell of EON which is a significant profit centre for the group.
Commenting on the move to sell Proton to Petronas, Tan Sri Dato’ Seri Mohd Saleh bin Sulong had emphasised that it was not because the DRB-HICOM Group wanted to get out of the automotive business. Far from it, in fact, as the present activities of its various motor-related subsidiaries indicate.
“It cost almost a billion ringgit to develop just one model – the Waja – and we felt that we just would not have the financial resources to take the national car company further,” he told AUTOWORLD.COM.MY in June. “We thought it was best in the national interest to let a financially stronger party take over Proton as its development may have become limited if we continued to hold on to it.”
Petronas’ official statement on the acquisition of Proton has been that this strategic investment will allow the national oil company and Proton to realise potential synergies in enhancing local expertise in automotive technology and further accelerate the integrated development of Malaysia’s automotive industry which is one of the cornerstones to the nation’s industrialisation programme. The collaboration will also provide Proton with a competitive edge especially with regard to engineering and technological resources as well as capability to place the national car manufacturer, and related supporting industries, in a stronger position to compete in the domestic and regional markets in the wake of mergers and consolidation of the automotive industry globally.
