A few months ago I suggested that the Malaysian government was on the verge of offloading Group Lotus to billionaire Syed Mokhtar Al-Bukhary and a consortium of other businessmen, in a deal put together by Lotus F1 Team owner Gerard Lopez. Things then went quiet for three months, presumably as the deals were sorted out. The government has now announced that Syed Mokhtar’s DRB-Hicom is buying Proton, the national car business – which owns Lotus – from one of the government’s holding companies. This is being announced as part of the government’s plan to divest itself of some of its industrial businesses in order to make them more competitive, and boost the Malaysian economy accordingly.
It will be interesting to see whether or not this will have any effect on the ownership of Group Lotus, which is supporting the activities of Lotus F1 Racing in Formula 1 – which is why Lopez was involved. Syed Mokhtar is reported to have paid $410 million for control of the business – which is not a huge amount, although the government can justify the price as a successful deal, given the poor returns that Proton has been producing in recent times.
DRB-Hicom distributes and assembles vehicles for Volkswagen and Mercedes-Benz in Malaysia, but the deal means that he will now control the two Proton factories, which have the capacity to make a combined 350,000 vehicles per year. It seems that the delays in getting the deal sorted out came because Proton chairman Mohd Nadzmi Mohd Salleh was also busy trying to buy the government shares in the business.
Syed Mokhtar is not saying from where the money is coming, but it is possible that part of the plan is to sell Group Lotus to help finance the purchase of Proton and DRB-Hicom will then set about assembling more cars in Malaysia, while also trying to improve Proton’s sales and image. That would leave Lopez and whatever investors he can find to buy Lotus, or at least a significant share of it, which would allow him to be in a position to have a more stable relationship between the car company and the F1 team and – because he is an ambitious soul – the chance to build Group Lotus into a stronger company. Whether this will include Group Lotus’s current CEO Dany Bahar or not, remains to be seen.