Harley-Davidson to buy MV Augusta for US$109m

Proton likely to get flak as it had sold the company for one euro in 2006

By S JAYASANKARAN
IN KUALA LUMPUR

AMERICAN motorcycle giant Harley-Davidson has, according to the Associated Press, agreed to buy MV Augusta for US$109 million, in sharp contrast to the one euro it paid when it bought the Italian bike-maker from Proton Holdings in 2006.

Harley-Davidson said in a statement out of Milwaukee last Friday that it was likely to seal the deal in weeks but the news is likely to unleash a firestorm of criticism against Proton, which was savagely assailed for the 2006 sale by no less a person than former prime minister Mahathir Mohamad, who conceived Proton back in 1984.

Proton, then under the leadership of Dr Mahathir protege Tengku Mahaleel Ariff, bought a 57.75 per cent interest in MV Augusta in December 2004 for 70 million euros (S$154 million). Dr Mahathir had stepped down as premier a month earlier but had been appointed Proton adviser by his successor Abdullah Ahmad Badawi at the time.

By 2005, Proton was floundering amid intense competition from better-quality Japanese models and relations between Tengku Mahaleel and the new Proton board, all appointed by Mr Abdullah, were tense. These culminated in the chief executive's contract not being renewed. Barely a year later, the company sold MV Augusta, with its debt of 107 million euros, for one euro.

Even so, the Harley deal would appear to vindicate both men and is likely to redound upon Proton and, by extension, Mr Abdullah and his administration, which has stoutly defended Proton's new management against the criticism of Dr Mahathir.