by NIU Qichang

Italian luxury yacht maker Ferretti S.p.A. (09638.HK), controlled by China's Weichai Group, is facing a challenge from Czech investment group KKCG, which has launched a partial offer to raise its stake to 29.9%, just below Hong Kong's mandatory takeover threshold.

The bid, announced in January, would make KKCG the second-largest shareholder behind FIH (Ferretti International Holding S.p.A.), which holds about 39% and is wholly owned by Weichai through entities ultimately controlled by Shandong SASAC.

KKCG, founded by Czech billionaire Karel Komárek, operates across more than 40 countries.

Ferretti's board has urged independent shareholders to reject the offer, while FIH has been increasing its stake, underscoring rising tensions between the two sides.

On March 18, KKCG defended its offer price of €3.5 per share (about HK$31.71), saying it represents an attractive premium and could improve corporate governance, while criticizing the independent financial adviser's assessment as biased.

Sub-threshold bid targets board influence

The 29.9% target allows KKCG to build significant influence without triggering a mandatory general offer, which is required once a shareholder crosses the 30% threshold under Hong Kong's Takeovers Code.

"This is a typical strategy to maximize influence at minimum cost," a banker familiar with Hong Kong takeover rules told Jiemian News.

The move is also aimed at influencing board composition ahead of Ferretti's annual general meeting in May, when directors are up for re-election.

People familiar with the matter said a 29.9% stake could secure at least one board seat and potentially more, raising the prospect of a proxy contest.

Ferretti currently has a nine-member board, with six directors from the Chinese side, including several linked to Weichai. However, key decisions still require balancing the interests of Italian management and minority shareholders.

"Even with a majority on the board, control is not absolute," the banker said.

KKCG began building its position in 2023, raising its stake to 14.5% before launching the offer. In response, FIH has increased its holding from about 38.76% to 39.53% as of March 17, still below the 50% level needed for outright control.

Ferretti's shares have surged amid the standoff, closing at HK$37.90 on March 18, up nearly 50% since December and above the offer price.

Ferretti board rejects bid amid governance tensions

Ferretti's board has urged independent shareholders to reject KKCG’s offer, citing concerns over valuation, deal structure and post-offer governance.

In a response released on March 12, the independent financial adviser, Altus Capital Limited, said the offer is "not fair and reasonable" and recommended that independent shareholders reject it.

On valuation, the adviser said the €3.5-per-share offer, while representing a premium to earlier trading levels, is below recent market prices and implies an EV/EBITDA multiple of about 5.3x — a discount to peers, according to the adviser.

On structure, it warned that the partial tender and pro-rata mechanism would prevent shareholders from fully exiting. Even if all independent shareholders accept the offer, only about 18% of their holdings could be tendered, leaving residual shares exposed to weaker liquidity and potential volatility.

On governance, the adviser said a post-offer structure with two large shareholders but no controlling majority could lead to boardroom deadlock if the two sides diverge on strategy.

KKCG rejected the assessment on March 18, calling it flawed and biased.

It said the adviser failed to account for share price gains driven by continued buying from FIH and the upward pressure from the offer, warning prices could fall once the offer period ends. It also challenged the choice of comparable, saying the selected peer group lacks meaningful comparability with Ferretti’s business model, pricing power and scale.

On governance, KKCG said introducing a second major shareholder would improve balance and strengthen minority shareholder protection, while questioning the independence of the recommendation, noting that the board’s stance relied on votes from directors linked to FIH.

Weichai control and governance tensions

The episode has drawn attention to underlying frictions between Ferretti's Italian management and its Chinese controlling shareholder, Weichai.

While Weichai remains the controlling shareholder, media reports cited by the adviser point to tensions between management and its Chinese backer, including over a share buyback plan. That dynamic may have created an opening for a new shareholder to seek boardroom influence without mounting a full takeover.

In that context, KKCG's move reflects not only a valuation bet, but a reading of the company's internal balance of power.

Weichai took control of Ferretti in 2012, helping rescue the company from financial distress and support its subsequent growth.

However, media reports cited by the adviser suggest disagreements between management and Weichai, including over a share buyback plan. CEO Alberto Galassi was reported to have strengthened management control by sidelining directors linked to Weichai. FIH has denied any interference.

Despite governance tensions, Ferretti's business performance has remained resilient. For 2025, net revenue from new yachts reached about €1.232 billion, up 5.0% year on year, while its order backlog rose 3.1% to €1.716 billion.

Despite global geopolitical tensions and slowing economic growth, Ferretti's focus on ultra-high-net-worth clients has helped shield demand from broader macro swings.

The offer acceptance period began on March 16, with the outcome now resting on independent shareholders. Whether KKCG can reach its 29.9% target — and translate that into boardroom influence — remains to be seen.