China’s Geely will buy a majority stake in Lotus as the British sports-car maker’s Malaysian owner attempts to recoup years of losses and expand its fledgling Proton brand to China.
Geely’s parent company, Zheijang Geely Holding Group, has owned Volvo since 2010. When the deal closes in July, the company will also own 49.9 percent of Proton, which presently owns Lotus and is controlled by the Malaysian conglomerate DRB-Hicom. The Lotus deal, worth the equivalent of $129 million, will see Geely take 51 percent and Etika Automotive, a body and engine manufacturer owned by Malaysian billionaire Syed Mokhtar Al-Bukhary, take the remainder.
In a financial disclosure dated May 24, 2017, DRB-Hicom said it is selling Lotus “in light of its historical losses and future capital needs,” and at a higher price than expected. For the fiscal years ending in March, Lotus recorded a $69 million loss in 2016 and $15 million through 2017. Lotus hasn’t turned a profit in almost two decades; Proton purchased the sports-car manufacturer from a Luxembourg holding company in 1996. While Proton has put Lotus up for sale at least twice, the Malaysian government forced its hand this time. The Malaysian automaker, created by the government in 1983 and kept afloat last year by a $350 million state loan, was under the obligation to find a “major new investor” to hedge against continued losses. Among those potential candidates were Suzuki, Renault, and th...