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KUALA LUMPUR, June 23 (Reuters) - Chinese automaker Zhejiang Geely Holding Group Co Ltd on Friday said it would help Malaysia’s Proton strengthen its presence at home and across Southeast Asia, as it finalised its purchase of a significant stake in the struggling automaker.
Geely in May said it would buy 49.9 percent of Proton from conglomerate DRB-HICOM Bhd as well as 51 percent of Proton’s ownership in British car maker Lotus.
The agreement was finalised at a signing ceremony on Friday.
With the deal, Geely hopes to grow its own market share in Southeast Asia as it targets sales of 3 million cars by 2020, Chairman Li Shufu said at a press conference in Kuala Lumpur.
“For Proton, we hope to help gain back market share in Malaysia, and also expand into Asean,” he said, referring to the Association of Southeast Asian Nations.
Geely would also consider producing Lotus cars in China, he said. “We hope to help Lotus penetrate the global market.”
Geely will buy its Proton stake for 460.3 million ringgit ($107.37 million), including a 170.3 million ringgit cash injection, said DRB-HICOM Managing Director Syed Faisal Albar.
Proton’s stake in Lotus will be sold for 100 million pounds ($126.99 million) to Geely and a Malaysian firm, he said.
DRB-HICOM suspended trading of its shares on Thursday pending the announcement.
Proton, founded in 1983 by former Malaysian prime minister Mahathir Mohamad, re-badges cars from foreign manufacturers to sell in the local market.
It has struggled in recent years and last year received 1.5 billion ringgit in government aid on the condition it pursues a turnaround plan and seeks a foreign partner.
Geely’s priority was to make both Proton and Lotus profitable while embracing new technology including electrification, lightweighting and artificial intelligence, Li said.
“When they have turned profitable and have sustainable development plans and products, then they can plan to export,” Li said, when asked if Proton would export to China. “There is no limit to it.”
Under the purchase deal, Geely is widely expected to take a leadership role in areas including production, manufacturing, sales and marketing, while DRB-HICOM will handle distribution.
Geely is the parent of Hong Kong-based Geely Automobile Holdings Ltd and Sweden’s Volvo Car Group.
$1 = 4.2870 ringgit $1 = 0.7875 pounds Reporting by Liz Lee; Writing by Rozanna Latiff; Editing by Praveen Menon and Christopher Cushing