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GM in talks to buy stake in Proton

Soraya Permatasari From | January 18,2007

GENERAL Motors Corp, the world's largest auto maker, may buy a stake in Proton Holdings Bhd, the Malaysian state-owned car maker that's seeking a partner to stem losses, a government minister said yesterday.

Detroit-based GM has "shown interest" in Proton, Malaysian Second Finance Minister Nor Mohamed Yakcop told reporters. Separate talks with Volkswagen AG and PSA Peugeot Citroen are continuing, which could also lead to the sale of a stake in the state-controlled car maker, he said.

Proton ended a 21-year alliance with Japan's Mitsubishi Motors Corp in March 2004 and is seeking a new partner to revive revenue, which fell to the lowest in at least seven years in the quarter ended September 30. GM is expanding in China, India and other Asian emerging markets, as sales slump at home, Bloomberg News said.

"GM can use Malaysia as an Asian platform, and that's very positive for Proton," said Nik Azhar Abdullah, who oversees US$684 million at Avenue Asset Management in Kuala Lumpur. "If you have three big names who want to get involved with Proton, it's very good."

Proton shares jumped 35 sen, or 5.5 percent, to 6.75 ringgit in Kuala Lumpur yesterday, giving the company a market value of 3.71 billion ringgit (US$1.1 billion).

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