DRB-Hicom Berhad has signed an agreement for China's Zhejiang Geely Holding Group (ZGH) to take a 49.9% equity in Malaysian carmaker Proton Holdings Berhad (Proton).
The contracts were signed at a ceremony in Kuala Lumpur on Friday, attended by the Malaysian prime minister Najib Razak, with the acquisition expected to be completed in three months.
The deal was valued at 460.3 million ringgit (108 million USA dollars), including a cash injection of 170.3 million ringgit into Proton by Geely, and a sports utility vehicle platform that is worth 290 million ringgit, DRB-Hicom Managing Director Syed Faisal Albar told a press conference following the signing ceremony.
Geely said in a news release that it will make every effort to enhance the market competitiveness of Proton and Lotus and to foster the revival of the two brands.
The definitive agreement between DRB-Hicom Bhd and China's Zhejiang Geely Holding Group (Geely) is worth RM460.3 million.
It's still early days in Proton's partnership with Geely, but the latter already has a few rough ideas of what it has in store for the Malaysian carmaker. As a result, the deal also saw Geely adopt a 51 percent majority stake in Lotus, leaving the Chinese company in charge of the relatively small British manufacturer's operations.
"Our partnership will enable Proton to become the industry leader in Malaysia and a top three brand in Southeast Asia".
Geely chairman Li Shufu said the company's priority will be to turn around both Proton and Lotus and put them on a sustainable growth path.
"We will work together for the resurrection of Proton in Southeast Asia. we believe it won't be long before we achieve profitability", he said.
ZGH in 2010 acquired Sweden's Volvo Cars.
Malaysia, he said, will also become the right hand-drive hub for Geely in this region, enabling the modern Tanjung Malim plant to be used to its maximum capacity, creating new jobs both locally and nationally.
Taking a dig at former premier Mahathir Mohamad who started Proton as a national carmaker in 1983, Prime Minister Najib Razak said in a speech at the event: "The reality had dawned on nearly everyone; namely, that the (Proton) business model was, and had always been, unsustainable in the long run".
Last year, Proton sold only 72,000 units, giving it barely 12 percent share of the domestic market, he said. The government will also supply the carmaker with the remaining 250 million ringgit of a 1.5 billion ringgit soft loan extended past year.