China’s Zhejiang Geely Holding Group, the company that owns the Volvo, Lynk & Co and Geely car brands, on Wednesday agreed to purchase 49.9 percent of Lotus parent company Proton from current owner DRB-Hicom.
As part of the deal, Geely will also purchase a 51 percent stake in Lotus.
Terms of the deal weren’t revealed as a final agreement isn’t due to be signed until late July.
It was first revealed in September that DRB-Hicom was looking to offload a stake in loss-making Proton and that Geely and France’s PSA Group, the owner of the Citroën, DS, Peugeot—and soon Opel—brands, were the lead bidders. DRB-Hicom bought Proton in 2012 from the Malaysian government but has struggled to turn the automaker around. Proton sold just 102,000 cars in 2015.
A potential boon for Geely is Proton’s two Malaysian plants which have a combined annual capacity of 350,000 cars. Proton also has a footprint in the growing Southeast Asian market, though it hasn’t enjoyed much success outside of its home market and even there sales are declining due to inferior products and poor after-sales service.
In addition, Geely would be able to employ the talents of the Lotus Engineering consultancy for future products.
The deal would also be a boon for Lotus. Given Geely’s successful hands-off approach with Volvo, this could be a major turning point for Lotus which for decades has suffered from a shortage of development funds. Already on the drawing board is an SUV as well as long-overdue, U.S.-legal replacements for the Elise and Exige sports cars.
“Geely Holding is full of confidence for the future of Proton, we will fully respect the brand’s history and culture to restore Proton to its former glory with the support of Geely’s innovative technology and management resources,” Geely CFO Daniel Donghui Li said in a statement. “We also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development, thanks to our experience accumulated through Volvo Cars’ revitalization.”