KUALA LUMPUR, June 23 — DRB Hicom today signed the definitive agreement with Zhejiang Geely Holding Group (Geely) to sell 49.9 per cent of Proton Holdings Bhd’s equity to the Chinese conglomerate.
The deal involves a cash injection by Geely worth RM170.3 million and a RM290 million on the implied value for the Geely Boyue model, which was earlier reported to be the first Proton SUV model from the collaboration.
“For over the last ten years, Geely has quietly but successfully emerged as a major player in the automotive market.
“Geely is ready to give Proton exclusive rights to the region, while Geely will also make Proton’s own research and development operation their centre of excellence in Asean, complementing the various sites they already operate across the globe,” Prime Minister Datuk Seri Najib Razak told a news conference here.
DRB Hicom group managing director Datuk Seri Syed Faisal Albar said that the partnership will also see expertise by Geely in helping Proton place a firmer footing in the country and also the Asean market.
“From the agreement, we are also looking at moving Proton’s plant completely to Tanjung Malim,” he said.
The agreement will also see DRB Hicom sell off 51 per cent of its shares in Lotus Advance Technology Sdn Bhd to Geely for 51 million pounds and the remaining to Etika Automotive Sdn Bhd.
With Proton selling off all of its Lotus' shares, the company will now be focusing fully on passenger cars.
Syed Faisal said the agreement would also allow Volvo cars, a brand that is also owned by Geely, to be manufactured at the Tanjung Malim plant.
“Of course priority will be given to the manufacturing of Proton cars but if there is capacity, we will accommodate Volvo cars, but this is a future plan in looking ahead towards this collaboration,” he said.
Proton's Tanjung Malim has a capacity to manufacture one million cars annually. It, however, only produced 72,290 cars in 2016, which is a 30 per cent drop from the year before.
Proton also reported a loss of RM1 billion last year.
Syed Faisal said the signing of the agreement was, however, yet to come to effect as there were regulatory compliance that needed to be sorted out by both parties.
As an example, he said DRB Hicom needs to hold an extraordinary general meeting to inform shareholders about the changes, which would also need to be filed with Bursa Malaysia as it is a listed company.
“Similarly, Geely needs to do the same in China so this will take time,” he said, without giving a timeline on when it will be done.
Syed Faisal also said the new SUV launched today will be made available in the Malaysian market soon.
“We are still on the midst of discussing if we should bring the Boyue in parts and assemble here,” he said.
The estimated price of the vehicle is yet unknown.
Proton previously received RM1.5 billion soft loan from the government to revive its crumbling operations.
Among the criteria made by the government was for Proton to seek a strategic partner to help it get through and compete with other carmakers.
* Editor's note: A previous version of this report was incorrectly headlined Najib: (DRM instead of) DRB Hicom-Geely partnership will drive Proton to success. The error has since been corrected.
