News on Proton-VW partnership hits the town

Malaysia’s Proton rallies on report of deal with Volkswagen

AFP – 2 hours 36 minutes ago

KUALA LUMPUR (AFP) – – Struggling Malaysian carmarker Proton rallied on the stock exchange Friday following a report it has struck a deal to form a partnership with Germany’s Volkswagen.

Proton shares rose 8 sen or 1.6 percent to 5.00 ringgit (1.52 dollars), defying a downward trend on the Kuala Lumpur Composite Index which slipped 3.36 points or 0.2 percent to 1,386.64.The Edge financial daily cited sources as saying protracted negotiations between the Malaysian government and Volkswagen have been concluded and that a memorandum of intent will be signed soon.

The agreement will set the stage for further due diligence and collaboration between the two parties, likely to be in the area of manufacturing, marketing and distribution, the report said.

The deal is intended to ensure that the foreign partner would be committed to making Proton an internationally competitive carmaker, the sources said.

Among the features of the deal being considered is that the Proton brand should be maintained under the strategic tie-up, the report said.

The Malaysian government’s investment arm, Khazanah, owns 43 percent of Proton.

Proton needs foreign technical expertise to halt a stream of losses and an eroding market share which has been pummelled thanks to a reputation for poor quality and unimaginative models.

The issue of management control is believed to have been a major sticking point in the negotiations with Volkswagen.