Sci-tech

Geely signs final contract with DRB-Hicom

Geely signs final contract with DRB-Hicom”

Geely, the Chinese owner of Sweden's Volvo Cars, will inject 170.3 million ringgit ($40 million) into Malaysia's Proton as part of its purchase of a stake in the automaker and is paying 51 million pounds ($65 million) for 51 percent of Proton-owned British sports vehicle maker Lotus, an executive of the Malaysian company said Friday.

Li Shufu, Chairman of Zhejiang Geely Holding Group and Malaysian Prime Minister Najib Razak will attend the event.

Under the deal, DRB-Hicom is also selling its entire stake in British sports automaker Lotus, with Geely taking a majority interest at 51 per cent for £51 million (S$90 million).

Citing a highly competitive environment in the SUV market, DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said the characteristic of Boyue and Iris is different in terms of sales and the estimation undertaken by KPMG is much more realistic based on the recent experience. We hope that through our cooperation with DRB-Hicom, Proton will be transformed into the number one independent automobile brand in Malaysia and one of the top three in southeast Asia.

For Geely, the $40 million cash payout is a pittance compared with the 1.3 billion ringgit ($304 million) DRB-Hicom paid to acquire a 42.74% stake in Proton from state investment fund Khazanah Nasional in January 2012.

Geely will also be producing right-hand drive Volvos at Proton's giant, and under-utilised, Tanjung Malim plant in southern Perak.

"Proton's status as a national auto is secure with DRB-Hicom still a majority shareholder".

He also said Proton and Lotus will create synergies for Geely to position themselves as a major player in the Southeast Asian market, which in turn will enhance the group's global position and help them to achieve sales target of 3 million units by 2020. Most likely, the engineers of the British brand will work together with a Studio Polestar - Volvo factory tuner, which is developing the "charged" versions of models for the Swedish brand. The Chinese owner of Sweden's Volvo Cars says it has signed the final contract to buy a stake in Malaysian automaker Proton, gaining a platform to expand in Southeast Asia. Proton uses only a third of its capacity, as its market share has declined over the years to 12.5% in 2016.

According to DRB-Hicom, the deal would see the government providing the firm with a RM250 million loan, which is part of the RM1.5 billion soft loan Proton took from the state.



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