Zhejiang Geely has reached an agreement with DRB-Hicom regarding the acquisition of a 49.9% equity stake in Proton for an undisclosed amount. Along with the acquisition of Proton, the deal also includes Geely acquiring a 51% stake of Lotus from Proton. The agreement is expected to be finalized before the end of July.
"With Proton and Lotus joining the Geely Group portfolio of brands we strengthen our global footprint and develop a beachhead in South East Asia. Geely Holding is full of confidence for the future of Proton. We will fully respect the brand’s history and culture to restore Proton to its former glory with the support of Geely’s innovative technology and management resources. Reflecting our experience accumulated through Volvo Car’s revitalization, we also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development by expanding and accelerating the rolling out of new products and technologies," said Mr. Daniel Donghui Li, Executive Vice President and Chief Financial Officer of Geely Holding Group
"Our intention was always to ensure the revitalisation of the Proton nameplate. It was Malaysia’s first national car brand and has more than 30 years of history. This deal will be the catalyst to elevate a brand that Malaysians resonate with," said Datuk Sri Syed Faisal Albar, DRB-Hicom group managing director.
The embattled Malaysian automaker Proton reported a RM991 million loss for the fiscal year ending March 31, 2016. Lotus also reported a loss of £18.3 million for the same financial year. Both companies are expected to declare further losses for the recently ended financial year as well.
The purchase of Proton will give Geely access to the Malaysian automotive market which will be their gateway to the lucrative ASEAN region.
With the purchase of Lotus, Geely could take advantage of the British marque's expertise in lightweight technology and composite materials for their future vehicles. It will also be the Chinese automaker's entrypoint into the UK market.