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Kuala Lumpur. Malaysian conglomerate DRB-Hicom Berhad said on Monday that it will buy national carmaker Proton in a 3 billion ringgit ($957 million) deal that could help revive Proton’s flagging fortunes.

DRB-Hicom said it would pay 1.29 billion ringgit for government investment arm Khazanah Nasional’s 43 percent stake in Proton. It will then make an offer for all Proton shares it doesn’t own at 5.50 ringgit a share.

Khazanah said the share sale would help put Proton on a more competitive footing. Analysts said it could help turnaround the struggling carmaker, which has failed in recent years to seal tie-ups with foreign carmakers including Volkswagen due to the government’s insistence on maintaining control over a high-profile local company.

DRB-Hicom, controlled by billionaire tycoon Syed Mokhtar Al-Bukhary, distributes and assembles vehicles for Volkswagen, Daimler’s Mercedes-Benz and Honda Motor. The group is also involved in banking, services and property sectors.

Trading of Proton and DRB-Hicom shares was suspended early on Monday. Proton’s share price has nearly doubled in the past two months, closing Friday at 5.18 ringgit. DRB-Hicom last traded at 2.17 ringgit.

DRB-Hicom pledged in a statement to safeguard Proton as a national car company. At the same time, it said it would seek to grow Proton in the regional market and help make Malaysia a preferred auto manufacturing center.

Once the king of the road, Proton’s fortunes have dwindled with its market share falling to around 30 percent from more than two-thirds just over five years ago due to greater competition as Malaysia liberalized its auto market.

It has been on the hunt for a foreign partner since Japan’s Mitsubishi Motors, which helped set up Proton in the early 1980s, sold its stake in 2004 due to financial problems. Talks with Volkswagen and General Motors later collapsed. Analysts have said Proton, which also owns British sports car maker Lotus, would need to tie-up with a large auto manufacturer to cut costs, gain new technology and penetrate the global market.

OSK’s Ahmad said DRB-Hicom’s entry would boost Proton with cash injection and new businesses that would add capacity at one of its plants in northern Perak state that is greatly underutilized.

He said the deal valued Proton at a discount based on its net assets including two manufacturing plants, but was justified given Proton’s poor prospects and annual capital expenditure of around 800 million ringgit.

The deal, entirely paid for in cash, will weigh on DRB-Hicom which earlier this year paid 623 million ringgit to buy Khazanah’s stake in national postal company POS Malaysia.

Associated Press