Proton – the saga of MV Agusta
Art Harun
MV Agusta and the saga of Proton – as opposed to Proton Saga – buying the former have never failed to intrigue me. I have written a piece about this a long time ago.
Just why a company, which was started to manufacture and sell value-for-money cars but which has failed miserably to do so and which has so far lived to see the sunlight every morning simply by virtue of protectionism and forced market intervention would go and buy an ailing company manufacturing high-end motorbikes escapes my simple mind.
MV Agusta was a lost making outfit with massive debts. And Proton paid a real hefty sum (RM560 million – according to DrM). With that, pursuant to Italian law, Proton also inherited Agusta’s debts of Euro 107 million. Should Agusta fall into bankruptcy, apparently Proton would have been subjected to a contingent liability of RM923 million. The original report is here.
The question is, why did the previous board of Proton deemed it prudent and in the best interest of Proton to purchase an ailing high-end motorbike company with massive debts?
The next question is why must Proton pay such a massive price for a company with obviously a negative net tangible assets leaving the whole purchase price to be treated as mere goodwill? In business term, was Agusta’s goodwill worth RM560 million?
And if one were to add the contingent liability – which was crystalising faster than a Proton Waja could go from zero to one hundred – Proton was actually paying more than a billion bucks for this company!
