Proton sells stake to Geely for RM460m

KUALA LUMPUR: The total consideration for the disposal of a 49.9% stake in DRB-Hicom Bhd's automotive arm Proton Holdings Bhd to China's Zhejiang Geely Holding Group Co Ltd is RM460.3 million.

This was derived based on a cash injection of RM170.3 million by Geely and an implied value of RM290 million for the Boyue model platform.

However, the implied value for Boyue was much lower than the initial estimation of RM600 million, which was based on the internal benchmark for the development of Iris.

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.

Boyue, a SUV under the C segment, is one of Geely's best-selling models launched in March 2016. Proton will rebadge, manufacture, sell, market and distribute Geely models in Malaysia and Southeast Asia.

DRB-Hicom and Geely inked a definitive agreement for the partnership here today.

Under the partnership, Syed Faisal said Proton will become the manufacturing hub for Geely's right-hand drive models.

Meanwhile, Geely chairman Li Shufu said the group's priority is to turnaround both Proton and Lotus.

"The revival of Proton and Lotus will not be an easy task in a market with fierce competition. We'll need to be fully prepared for the long and challenging road ahead," he noted.