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Lotus makes sports cars and racing cars (Photo: Lotus)

Geely Automobile said its parent company, Zhejiang Geely Holding Group, has agreed in principle to buy significant equity stakes in Malaysian carmaker Proton and Proton-owned British specialty race car company Lotus.

In a filing with the Hong Kong Stock Exchange, where Geely Automobile's shares are listed, the carmaker said the holding company has reached "a binding heads of agreement" to buy 49.9 pc of Proton and 51 pc of Lotus.

Geely Holding said in a press release that the agreement "lays the foundation for a wider framework for both Geely Holding and Proton and Lotus to explore joint synergies in areas such as R&D, manufacturing and market presence."

Geely, which also owns Sweden's Volvo Cars, is keen to expand beyond its Chinese home market. Last year, the company launched a new international brand, Lynk & Co, which is marketing its first model, an SUV, in China. The car will likely come to Europe in 2018.

Lynk & Co was established in close cooperation with Volvo Cars. The new brand's management ranks are filled with Volvo and former Volvo executives.