KUALA LUMPUR -- Billionaire Syed Mokhtar Al- Bukhary's DRB-Hicom agreed to buy Lotus sportscar-owner Proton Holdings for 1.29 billion ringgit ($410 million), in Malaysia's biggest automotive takeover since 2000.
The automobile assembler will buy 234.7 million Proton shares, a 43 percent stake, from state-owned Khazanah Nasional, DRB-Hicom said on Monday.
Proton is headed for its second year of profit declines. The deal paves the way for Syed Mokhtar to widen his share of the Southeast Asian country's car industry and expand a business empire that already includes ports, airports and power plants.
DRB-Hicom distributes and assembles vehicles for Volkswagen and Mercedes-Benz. It has eight assembly plants, of which four are for cars.
Proton gives DRB control of two Malaysian car plants with the capacity to make a combined 350,000 vehicles per year.
The agreement comes a month after former Prime Minister Mahathir Mohamad, who founded Proton in 1983, endorsed DRB-Hicom's bid.
"There are lots of synergies that could be gained between DRB and Proton," said Ahmad Maghfur Usman, an analyst at OSK Holdings in Kuala Lumpur. "Proton still needs a massive overhaul from DRB."
DRB-Hicom beat Proton Chairman Mohd Nadzmi Mohd Salleh, who had also sought to purchase the controlling stake in Malaysia's first automaker from Khazanah.
DRB said it expects to complete the deal by the second quarter.
Mahathir, who was Malaysia's prime minister for two decades, said in a joint interview Dec. 12 that Proton should be sold to DRB-Hicom -- a company he described as being well-run and having the capacity to turn around Proton without undermining its vendors. Mahathir is a Proton adviser.
Syed Mokhtar, 60, is Malaysia's second-youngest billionaire after Berjaya Corp. Chairman Vincent Tan, according to Forbes magazine's latest rankings. His ties to Mahathir, who describes the Malaysian tycoon as a friend, stretch back more than a decade.
Proton, whose vehicles are driven by taxi drivers across Malaysia, are among the cheapest cars sold in the country.
Profit at the company, which had two annual net losses over the past five years, is poised to fall 60 percent in the year ending March, according to the average of 11 analyst estimates compiled by Bloomberg.