Has VW Revived Talks about Proton Stake?

Volkswagen AG is interested in acquiring an equity holding in Malaysia's Proton Bhd, according to Manager Magazin, which cites unidentified company sources.

The German magazine reports that VW might eventually consider buying all of Proton but says the Malaysian government has thus far rejected the idea. VW says it won't comment on speculation.

For most of the last decade VW pursued a tie-up with Proton, which was then state-owned. Negotiations repeatedly broke down over issues of control. But the automaker reportedly still wants to make Malaysia a production hub for southeast Asia.

Speculation about VW's intentions revived in January when Malaysia's DRB-Hicom Bhd bought a controlling stake in Proton. The conglomerate said it was holding preliminary discussions with several potential partners for the carmaker. VW and DRB are already partners in a 1 billion-ringgit ($316 million) venture formed in late 2010 to assemble Passat sedans at a DRB plant in Malaysia.

News reports in February said VW had dispatched senior executives to Malaysia to assess the possibility of making its vehicles at one of Proton's two assembly plants there mostly likely at a modern but underutilized factory in Tanjung Malim north of Kuala Lumpur. In return, the German carmaker would reportedly contribute the technology and emerging-market experience needed to turn Proton around.