XinHua Finance (XFN Asia) says an industry source informed it that Volkswagen AG has signed an agreement to buy a substantial stake in the manufacturing arm of Malaysia’s Proton Holdings Bhd. The stake involved is the rumoured 51%, and an announcement is expected to be made on Feb 8. This syndicated news report caused Proton shares to surge 90 sen to close at a price of RM7.75, more than 13 percent higher. This proves to be an instant win for shareholders like the EPF which recently increased it’s stakeholding in the national car manufacturer.

In response to this, Proton issued a statement saying it could not confirm this report and it was purely a shareholder’s matter. It said to wait for the government’s announcement before the end of Q1 2007. The PM also spoke regarding this issue, saying he did not want to comment as the matter was still under negotation.