PUTRAJAYA: DRB-Hicom Bhd is selling a 49.9% stake in loss-making Proton Holdings Bhd to China-based Zhejiang Geely Holding Group Co., Ltd (Geely Holding).

As part of the deal, Geely would also buy the entire stake in Lotus, British sports carmaker from Proton.

The entrance of Geely as a foreign strategic partner would revitalise Proton which booked about RM1bil in net loss for the financial year ended March 31, 2016.

DRB-Hicom said on Wednesday it had reached an agreement for the sale of the stake. Both parties expect to sign the definitive agreement in July 2017. It currently owns 100% of the manufacturer of the first national car.

The deal will also see Geely buying a 51% stake in British carmaker Lotus and EASB taking up the 49%.

The two parties signed the agreement here, witnessed by Second Finance Minister Datuk Seri Johari Abdul Ghani.

Geely, which already owns Volvo brand and The London Taxi Company, would be expanding its reach into the South East Asia region through Proton.

Proton has a ready capacity in its plan located in Tanjung Malim. The plant has annual production of 150,000 cars and designed to have a maximum capacity of one million units per year.

DRB-Hicom has been on the lookout for an international partner for Proton. PSA, a French carmaker and the owner of Peugeot and Citroen brands, was also said to be one of the suitor for Proton.

The deal will enable Proton tap into Geely Holding’s vast range of platforms and powertrains, and will also enable Proton to have access to existing markets of the Chinese carmaker, as well as right-hand drive markets in South-east Asia.

The deal with Proton will offer Geely access into the key Asean market, and also R&D and manufacturing presence in the region.

DRB-Hicom group managing director, Datuk Seri Syed Faisal Albar says the Proton brand will remain present and will grow significantly with the new foreign strategic partner on board.

"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 Syed Faisal.

Geely Holdings, which also owns Volvo Car Corporation and The London Taxi Company, is one of the leading passenger vehicle carmakers in China.

Geely Holdings has facilities across the globe, including 16 manufacturing plants, seven design studios and five research & development centres.