DRB Open to Selling Sports Carmaker Lotus After Proton Takeover

Jan. 18 (Bloomberg) -- Malaysian billionaire Syed Mokhtar Al-Bulkhary’s DRB-Hicom Bhd. said it’s open to selling unprofitable sports-carmaker Lotus Group International Ltd. after taking over parent Proton Holdings Bhd.

DRB-Hicom is “open to options,” Managing Director Mohd Khamil Jamil told reporters today in Selangor, outside of Kuala Lumpur. “We can’t do due diligence on Lotus earlier so will need time to look into Lotus.”

Khazanah Nasional Bhd., the Malaysian government’s investment arm, this week agreed to sell its controlling 42.7 percent stake in Proton to DRB-Hicom for 1.29 billion ringgit ($414 million). DRB also accumulated an additional 7.7 percent stake in the open market, according to an exchange filing yesterday, taking its total holding beyond the 50 percent threshold before its mandatory general offer.

Proton, which makes sedans and taxis, hasn’t made any profit from Lotus since acquiring the sports carmaker in 1996. The British manufacturer, which has struggled to compete against Porsche AG and Ferrari SpA in Europe, has hung on to relevance in the auto industry partly because of its decades-long expertise in designing lightweight frames.

“We need to sit down with Lotus management, looking at their plans before arriving at a definitive decision,” Mohd Khamil said. “It has been there for years and has done some good things.”

Sale Speculation

Lotus’s sale has been the subject of speculation. Shanghai Automotive Industry Corp. last month denied an Edge newspaper report that said China’s largest carmaker is interested in Lotus. Three months ago, Proton denied a report by the Star newspaper that it was selling its Lotus stake to Luxembourg- based Genii Capital.

DRB-Hicom rose as much as 3.3 percent to 2.17 ringgit in Kuala Lumpur trading today. It pared gains to 2.14 ringgit at 11:25 a.m. local time, compared with a 0.2 percent drop in the benchmark FTSE Bursa Malaysia KLCI Index. Proton rose 0.4 percent to 5.43 ringgit, shy of DRB’s 5.50 ringgit-a-share takeover offer.

DRB-Hicom plans to delist Proton and make it a subsidiary after completing a general offer, Mohd Khamil said. DRB doesn’t plan to sell any stake in Proton to partners, though the company is open to collaboration with global car manufacturers like General Motors Co. and Volkswagen AG, he said.

DRB is holding talks with General Motors, Proton Chairman Mohd Nadzmi Mohd Salleh said on Jan. 6, while DRB already assembles vehicles for Volkswagen.

Malayan Banking Bhd. will arrange loans to finance the purchase, Mohd Khamil said. DRB-Hicom’s financial position is “very healthy,” he said.