National carmaker Proton today signed a letter of intent to acquire a 50 percent stake in Italian motorcycle producer MV Agusta Moto SpA as part of an expansion programme.

The 50 percent stake would give Proton distribution rights and a controlling stake in Agusta which, Proton said in a statement, is acknowledged as the "Ferrari of motorcycles".

Chief executive Mahaleel Ariff said Proton had started its own motocycle programme in 2001 when it formed a team to compete in the Moto Grand Prix.

"With the ongoing reorganistion taking place at Proton, it is fair to say that the future of the company will not be single-handedly dominated by car manufacturing," he said.

"Proton is looking at the entire transportation suite and driving this ambition is our strength in our engineering."

Proton did not provide the value of the proposed stake.

Prime Minister Mahathir earlier witnessed the signing between Mahaleel and Agusta founder and owner Claudio Castiglioni at the premier's office in Putrajaya, the new administrative centre south of the capital Kuala Lumpur.

Mahathir will retire Friday after 22 years in power.

Great designers

Mahaleel said Proton was impressed by Agusta's engineering technology, award winning designs and styling.

Both companies would evaluate how they could leverage each other's strengths to improve productivity and Proton would have access to Italian design and flair, he said.

"Italians are famous for designs, everything from fashion and motorcars to motorcycles. This is something we have to admit they are class leaders in and perhaps one of the elements missing in out products.

"The alliance with Agusta would complement Proton's British unit Lotus and play a key role in influencing the styles and direction of Proton's future products," Mahaleel said.

Officals said the letter of intent allows Proton three month to evaluate the feasibility of the deal.

Agusta was established in 1978 under the name Cagiva Motor. The company was subsequently renamed MV Agusta. It manufactures and sells 18,000 motorcycles a year. It has also made a mark in motorcycle racing with 75 world championships and 270 Grand Prix victories, the statement said. - AFP