Senior auto-industry executives said Mitsubishi, which controls a 16.06 per cent interest in the Malaysian car company, is concerned that Proton may pay too much for stakes held by DRB-Hicom Group in Malaysian car distributors Edaran Otomobil Nasional Bhd and Usahasama Proton-DRB Sdn Bhd.

DRB-Hicom has effective control of Proton through the 27.2 per cent interest held by its listed associate Hicom Holdings Bhd. In early July, Hicom Holdings ended six months of negotiations to sell its interests in Proton for about one billion ringgit ($263.2 million) to state oil company Petroliam Nasional Bhd, or Petronas. The sale of DRB-Hicom's stake to Petronas can only be completed after Proton reaches an agreement with its shareholders over the purchase of DRB-Hicom's two car distributors, say industry executives close to the talks.

It isunclear how much DRB-Hicom is asking for these two stakes, and it is also unclear how far apart Proton's Malaysian and Japanese shareholders stand over the valuations.

Mitsubishi's spokesman in Japan, Fumio Nishizaki, said the company didn't have any comment on the matter. DRB-Hicom chairman Tan Sri Saleh Sulong also declined to comment on specific issues regarding continuing negotiations. In a written response to queries, Tan Sri Saleh said, ``Expectedly, there are still differences that need to be ironed out and gaps to be bridged.'' But he noted that negotiations are progressing.Some auto-industry officials speculate that Mitsubishi is opposed to the move because Proton's acquisition of DRB-Hicom's stakes in the distributors could deplete much of the national car maker's cash reserves, currently estimated at 1.2 billion ringgit.

For DRB-Hicom, which is undergoing a corporate restructuring, the sale of its Proton stake and its holdings in other firms associated with the national car project iscrucial.

--The Wall Street Journal