Volkswagen closer to acquiring Malaysia government stake in Proton, say reports

21 July 2007

Mumbai: Malaysia''s Proton Holdings Bhd is closer to a partnership deal with Germany''s Volkswagen after two rounds of talks between the two carmakers, Malaysian newspapers reported.

State-controlled Proton, which is 43 per cent owned by state investment arm Khazanah Nasional Bhd, is in talks with Volkswagen as also General Motors of the US to sell part stake in the loss-making company.

While a third round of talks with Volkswagen is likely, talks with General Motors are also under way, the government said last month. However, Volkswagen is considered to be the frontrunner to partner Proton.

Under the new proposals, Proton will control the domestic distribution network while Volkswagen will handle international distribution, reports quoted unidentified sources as saying.

VW may also have agreed to raise some fresh equity for a 51-per cent stake in the new company that will own key assets of Proton, the balance of the equity will be in the form technology injection and platforms.

Malaysia''s trade minister said while the country wants to sell its stake in Proton, it but won''t make a hastily decision.