Talks between Proton and Volkswagen AG have been stalled due to a disagreement between Volkswagen and Proton top management on the amount of equity which Volkswagen wished to take in the company.

Volkswagen’s stake in Proton would offer tremendous benefit to Proton as Volkswagen would be able to offer Proton technical expertise and global market reach.

However some technical details could not be ironed out so details on how much equity Volkswagen is going to take remains hanging at the moment.

Volkswagen was reported to be interested in a significant interest, not taking over the whole Proton group altogether. Even though Khazanah Nasional which has a 42.7 percent stake in Proton agreed to the idea, Proton management, led by Tengku Mahaleel Ariff opposed to the amount of equity Volkswagen wished to take. They agreed to Volkswagen taking up the equity but they wanted it to be significantly less than proposed.

Even as it is, the proposal would not result in Volkswagen becoming a majority shareholder or taking over control of Proton. I don’t know why Mahaleel and his team would oppose to this.

How ironic, when Proton’s advisor Tun Dr. Mahathir was reported to say this to the press in a report by The Edge.

‘We have no problem in Volkwagen buying shares in Proton. If we want to, we can sell more than 50% to Volkswagen. They are quite willing, I think, to buy even 100%.

I suppose the keyword here is “if we want to”, which in this case Proton does not want to.

Sources: AFX via Forbes, Associated Press via Forbes