DRB-Hicom ... Aug09

Auto player is negotiations with VW AG to assemble its cars here have run into a snag.

Sources says talks between the two companies hit a brick wall following interference from certain government linked bodies that forced the diversified giant to cease discussions with the German automaker.

Officials close to DRB Hicom confirmed that there was some difficulty in the negotiations saying this occurred about three weeks ago.

Industry officials do not rule out Proton and VW coming back to the negotiating table.

It is believed that in recent months, Proton’s management has been leaning towards collaborating with a foreign partner on its operations in Malaysia and also on its subsidiary Lotus plc.

It is not known if the scuttled talks have anything to do with Proton’s plan to get a strategic partner. Proton and VW have been engaged in talks in forming a strategic partnership and possible equity participation by the German carmaker since 2004 but do deal has materalised.

At present Euromobil Snd Bhd, a unit of the DRB-Hicom is a dealer of VW cars. Euromobil is a wholly owned by Edaran Nasional Bhd, which in turn is a 79% owned unit of DRB Hicom.

Talks that VW cars will probably be assembled by DRB-Hicom has been around for sometime now. These cars would have been for the Asean market.

The latest development is unlikely to hinder DRB-Hicom’s import of VW cars since the appointment of DHAS (wholly owned unit of DRB-Hicom) as the importer became effective in April 2009. Under DHAS, it has the APs to import VW cars among others.

Financial Results …

For FY2009 ended March 31, 2009, DRB Hicom posted a net profit of RM660 million on the back of RM6.1 billion in revenue. The huge jump in net profit was due to the sale of DRB Hicom’s 20.2% stake in EON Capital to Primus Pacific Partners for RM1.3 billion cash.

DRB-Hicom’s largest shareholder is Tan Sri Syed Mokhtar with a 55.9% stake.

Related:-
DRB Hicom Bhd/MMCCorp ... July 09
DRB-Hicom Bhd/EON ... Nov 2008