tHE pROtoN sAGa…

PMA: Hello everyone, I am Paula Malai Ali, and welcome to the pilot programme of “Money, and Nothing Else Matters.” Our special guest tonight is Mr Art Harun, a not too well known cynic-at-large. Hi Art, can I call you Art? Welcome to the show. Gosh, you are looking kinda hot…”
AH: Thank you. Yea, I am feeling hot. Is your air-cond working? Yea, you can either call me Art, or call me later, I am cool…yeah…cool.

PMA: Ooops, sorry, we had a power failure for 8 hours just now and power was just restored and I guess the air-cond needs time to power up.
AH: Oh, okay. “Nothing Else Matters” huh? That’s a Metallica song, in’it?
PMA: Metal-lick who?
AH: Oh, never mind…

PMA: Well, Art, I would love to ask you about yourself, I mean, what and where you eat, who you sleep with and stuffs, but my producer wants me to ask you about The Proton takeover. Erm…you have any thought about it?
AH: Hmm…well, first of all, it is not a takeover. It is just a proposed acquisition of Proton’s shares by Volkswagen.

PMA: Owh…it’s not a takeover than. Hehe…what is a takeover?
AH: A takeover is something like the English did to Malaya prior to our independence. They came here, they took everything they liked, they did anything they wanted, they plundered our resources, fed our leaders with opium and they left. That’s a takeover. There is a certain degree of unwillingness on the part of the target object for it to be a takeover. What Volkswagen is proposing here is merely to acquire some of Proton’s shares and I believe they want to acquire a controlling interest in Proton.
PMA: Gosh, you sound so clever Art.
AH: And you are cute too. You were so cute in the “Chequered Flag” yesterday.
PMA: Uh…chequered flag? Omigawd, you saw it?
AH: Yea…sure, ASTRO ran that programme after the F1 race yesterday and you were co-hosting it.

PMA: Oh God, for a moment I thought you saw me in that chequered undies and bra I was wearing yesterday! Oh God…oh…uh…so, what are your thoughts about the proposed takeover…. I mean, acquisition or whatever?
AH: I think it’s the longest and most drawn out proposed acquisition in corporate history. They have been talking and negotiating since 2 years ago. Since then, well, North Korea has agreed to a nuclear disarmament pact; Koffi Annan has retired; Saddam is dead; Britney Spears has gone bald, Elton John has gotten married to a man and Proton is still talking about Volkswagen! I think it’s stupid! I don’t really know what is wrong and why it is taking so long. I mean, it looks like there would be a solution to the Palestinian crisis before this acquisition is going to be completed.

PMA: Hmm…why do you think it’s taking so long?
AH: Well, maybe, just maybe, the Volkswagen representatives are speaking German and the Proton’s reps are speaking Malay at the negotiating table. And the translator is a Japanese. And so, everything is like, lost in translation lah…

PMA: Hehe…you are so cute Art.
AH: Paula, lemme tell you something. Please don’t you ever ever call any man, me included, cute. A Volkswagen Beatle is cute. A Barbie doll is cute. And so is a rabbit. Your chequered undies may also be cute. But men are not cute, okay?

PMA: Erm…okay. So, seriously, why do you think it is taking them so long?
AH: I don’t know really. You see, Proton is at a crossroad. No. Sorry. Proton is in the pit! One helluva deep and almost bottomless pit. Can you imagine, with all the protectionism policy by the government and the almost monopolistic market, which they have in Malaysia, it still manages to outdo the dumbest of the dumbos and not making money? Its cars are of low quality. Speaking of quality, you would remember that the last management, in their effort to improve quality, engaged TUV of Germany to certify quality for Proton Savvy. Now even the TUV certification has stopped! Why? I am sure many are interested to know. It’s marketing strategy and packaging is suspect, to say the least and to put it mildly. Production has been cut from 22000 units per month to only 4000 units per month! And despite the various tax and duty exemptions, it still manages to be relatively expensive compared to other brands in the same market sector. In short, something is not right about Proton. It is not cost efficient. It is not competitive. This translates to poor sales and income, which in turn causes poor profitability. So, it needs new branding, new marketing strategy, and new technological as well as strategic partner to be competitive. The infrastructure is there. It just needs a push for the next step to be achieved. Volkswagen knows this and they have expressed their interest to acquire Proton. Volkswagen is one of the biggest car manufacturers in the world. With the kind of marketing networking and know how, and with the kind of technological know how which they possess, they are in a position to propel Proton to a higher level of efficiency and profitability. It is all about good and sound business decision. It’s about making money from business. Approached from a purely business point of view, it is a simple deal and a simple decision to make. I mean, Proton needs a strategic partner. Volkswagen is there. So, it is just a matter of agreeing on a price, which is quite easy to do. Then it is a matter of agreeing on the management team.

PMA: Oh, it’s a bit like me buying a handbag ya? I choose the handbag and pay the price, right? Hehe…
AH: Well, that’s half correct. With the handbag, you pay and you bring it back home and use it. With Proton, there is a decision to be made on the price first. But that is simple. You look at the assets and the liabilities and ascertain the net tangible assets and there you go, you would be able to ascertain the value of the price per share. To ascertain the assets and liability, of course Proton would have to "open" up to Volkswagen in a process known as "due diligence". Of course if Proton is not willing to open up or has something to hide, this process is going to be difficult. What is then left to be done is to put a premium on the value of the shares because Volkswagen is acquiring a controlling stake.

PMA: Is that difficult to do?
AH: Well, it is complicated but not that difficult. You have various benchmarks from all over the world. You look at the automobile industry as a whole and look at past mergers and acquisitions and you could then have a rough idea of how much premium could be attached to the Proton shares. Look at the Renault’s acquisition of Nissan for example. It was smoothly done. Nissan was in trouble. Renault came in. Carlos Ghosn from Renault became the CEO and now, just look at where Nissan is! I mean even the Japanese allowed a Frenchman to be their CEO in times of trouble!

PMA: So, what do you think is happening?
AH: I could only speculate. I think irrelevant issues are being considered in the negotiations. When I say irrelevant issues I mean issues which have nothing to do with business at all. Things like “if Volkswagen comes in, there must still be a Bumiputra Managing Director/CEO” or a Bumiputra or Malaysian management”. Things like “if you come in, you must ensure that Proton’s vendors must be Bumiputra” and stuffs like that. I mean, if the seller of the shares do not want to relinquish management to Volkswagen, why must Volkswagen acquire a controlling interest? And why must the seller fear Volkswagen’s management of Proton? After all, Volkswagen is bigger than Proton. They have been in the business for far longer than Proton. They know the market. They have the expertise, both in terms of marketing networking and strategy and production technology and know how and not to mention financial clout. After all their parent company is Porsche! Why don’t we give them the power to manage with a set target and see what they can do for a number of years? We can then all learn from them and obtain a transfer of technology and expertise. Why are we behaving in a strange manner? Why are we being so non-business minded? I mean, how simpler could it be? We have a business. We cannot make it work. We need help. And when someone in the know comes knocking on our door, we are saying, okay, you pay this sum and you let us manage our business. Huh? Like, duh? And in so far as the vendors issues are concerned, well, if there are other vendors who can be cheaper and who offer better quality parts, change them la. What is so difficult about that? That is sound business decision. After all, Proton has to be more cost efficient and produce better quality cars. All these Bumiputra things are nothing but misplaced national pride at work. Well, I suppose the election is coming and maybe the government doesn’t want the “rakyat” (don’t you just love this bloody patronising word…”the rakyat” when it is used by the politicians?) to feel like it has sold out the Bumiputra by selling Proton to a foreigner and let it be managed by them. It is somewhat like Hishamuddin Hussein’s objection against MAS having a foreign CEO the other day lah…typical lah…if you do that, then some Malays may start carrying their Keris in public lah…biasa lah…the Malays kan kuat mengamuk? So, I think the definite spanner in the works as far as Proton’s acquisition by Volkswagen is concerned is the fact that irrelevant issues are being considered. At this rate, no big car manufacturer is going to talk to us. Let alone be Proton’s strategic partner.

PMA: God you are hot…..

DISCLAIMER: No Proton or Volkswagen cars were in any way harmed, damaged or tortured in the production of this piece. Nor was Paula Malai Ali in any way harmed, damaged or tortured as well. For those who are interested in the chequered undies and bra, please contact Daef or The Anomaly via e mail.