Chinese automaker acquires stake in Malaysia’s national car Proton

China’s Zhejiang Geely Holding Group announced that it has reached a binding heads of agreement with DRB-HICOM Bhd to purchase a 49.9% stake in Malaysia’s national carmaker Proton, marking another major Chinese automaker’s investment in Southeast Asia. The agreement with Geely is expected to be signed in July.

Geely, the parent company of Hong Kong-based Geely Automobile Holdings Ltd. and Sweden’s Volvo Car Group, also includes the sale of Proton’s 51% equity interest in British automaker Lotus Advance Technologies Sdn Bhd.

The vetting process to find a foreign strategic partner for Proton started last year and involved 15 global auto players. Geely is expected to offer Proton some of the latest vehicle technologies it has developed with Volvo’s input, with the aim of growing its overseas sales. Founded in 1983 under former Malaysian Prime Minister Mahathir Mohamed, Proton at its peak boasted a 74% local market share.

“Proton will always remain a national car and a source of pride, as Proton will still have a majority hold of 50.1%,” according to Malaysia’s Second Finance Minister Johari Abdul Ghani. “Our very own much-loved brand now has a real chance in making a comeback, a huge one I hope.”

DRB-HICOM, which is owned by Malaysian business tycoon Syed Mokhtar, acquired Proton in 2012. DRB-HICOM is one of Malaysia’s leading conglomerates with core businesses in the automotive, services and education, as well as the property sectors. In the automotive sector, DRB-HICOM is involved in the manufacturing, assembly and distribution of passenger and commercial vehicles, including the national motorcycle.

“Our intention was always to ensure the revitalization 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 DRB-HICOM Group Managing Director Syed Faisal Albar.

HSBC advised Geely on the deal. However, the value of the transaction was not disclosed.

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