KUALA LUMPUR -- DRB-Hicom said Wednesday it will sell a 49.9% stake in Proton Holdings, its fully owned automaker, to China's Zhejiang Geely Holding Group. In the deal, Geely also gets Proton's 51% stake in Lotus, the British sports car maker.
The announcement came after the Malaysian automotive conglomerate spent nearly a year searching for a foreign partner to help it turn around Proton. For, Geely, which also owns Sweden's Volvo Cars, the deal will help it foray into Southeast Asian markets.
DRB and Geely expect to sign an agreement by the end of July. The two companies are seeking synergies in manufacturing, research and development and other areas. They did not disclose how much Geely will pay for the stake.
Donghui Li, Geely's executive vice president and chief financial officer, said in a press release that with Proton and Lotus joining the group, the Chinese company aims to "strengthen our global footprint and develop a beachhead in Southeast Asia."
Currently, Proton gets the majority of its sales in Malaysia. Last year, it sold some 72,000 units in the country. Across the border in Thailand, it sold fewer than 150 units. In Indonesia, it sold fewer than 50.
Even in its home market, the Malaysian brand has been struggling for years; its market share eroded from over 70% in 1993 to 12.5% in 2016.
In a report on Wednesday, Malaysia's AmInvestment Bank pointed out that "sales of Proton's passenger cars continued to tumble to 4,700 units in April, the lowest since August last year."
Geely's Li added that the company will "restore Proton to its former glory with the support of Geely's innovative technology and management resources."
DRB said in a press release that the Proton brand will remain.
Proton has been left without a foreign partner since 2005, when Japan's Mitsubishi Corp. sold its stake.