Proton takeover?

The recent sharp jump in Proton Holdings Bhd shares has given rise to speculation over a management buyout (MBO) as well as rumours of takeover proposals for the national carmaker.

Proton shares have gained 83 sen since Tuesday and closed yesterday at RM3.53.

On Wednesday, Proton warrants also jumped, with Proton-CG rising 4.5 sen to 13 sen while Proton-CH was up six sen to 12.5 sen at the close.
Research analysts and stockbrokers are surprised by the sudden surge in Proton's share price. They say the marketplace is abuzz with all sorts of rumours.

JF Apex Securities Bhd deputy managing director Lim Teck Seng said that Proton's share price usually would not see such a surge without an important corporate announcement or development.

“Perhaps investors are expecting some big announcement to be made. On the other hand, maybe there is a liquidity play as the “party” is still going on in the market with the recent heavy trading in penny stocks. Investors are looking for cheap stocks,” said Lim.

The Government's investment holding arm, Khazanah Nasional Bhd has a 42.74% stake in Proton, while the Employees Provident Fund (EPF) and Petroliam Nasional Bhd (Petronas) have stakes of 10.78% and 7.85% respectively.

In the past, conglomerates such as Naza Group and DRB-HICOM Bhd have been linked to potential deals involving Proton.

DRB-HICOM is unlikely at the moment to be involved in a takeover bid for Proton.

One research analyst said the possibility of a takeover bid by Naza and DRB-HICOM was quite low.

“DRB-HICOM has a lot on its plate such as the assembly of Volkswagen cars and the recent acquisition of Pos Malaysia Bhd.

“We are also unsure about the rationale for these rumoured takeover bids by Malaysian conglomerates as in our opinion, what Proton really needs is an automotive partner that can help the carmaker via technology transfer and fully utilising its production capacity,” she said.

Motor analysts were also sceptical about rumours of an MBO of Proton.

At RM3.53 a share, Khazanah's stake in Proton would be worth about RM828.6mil.

A recent report from AmResearch had estimated Proton's adjusted net tangible assets (NTA) per share at RM5.26.

“With an MBO, the questions of funding and the price per share for such an exercise would arise. Also, what would be the rationale for an MBO?” said one analyst.

However, a motor industry observer said a potential corporate exercise for Proton could not be dismissed in view of the Government's plan to rationalise the portfolio of GLCs (government-linked companies).

Another bank-backed motor analyst said she was told by the Proton management that it was not aware of any material developments or company updates which could have caused the sharp spike in the company's share price.

The analyst said the recent increase in Proton's share price might have been due to positive news flow this month such as the settlement of the legal dispute with Tan Sri Tony Fernandes and his 1Malaysia Racing Team concerning the “Lotus” and “Team Lotus” brand, the possibility of Proton re-entering Chile next year, and the opening of Lotus China's first showroom in Beijing.

By THOMAS HUONG, huong@thestar.com.my