Board Chairman of SHIG-Weichai Group Tan Xuguang (2nd R, front) and his Ferretti Group counterpart Norberto Ferretti (2nd L, front) attend the signing ceremony of the strategic restructuring agreement in Jinan, capital of East China's Shandong province, Jan 10, 2012. The Weichai Holding Group Co Ltd, a subsidiary of Shandong Heavy Industry Co Ltd will pay 374 million euros ($292.7 million) for a 75-percent stake of Italy's Ferretti Group, which is restructuring its assets. Founded in 1946, the Weichai Group is one of China's largest heavy-duty vehicle and auto equipment manufacturing companies. (Xinhua/Xu Suhui)

A manufacturing company from east China's Shandong province will buy Italian luxury yachtmaker Ferretti Group, according to an agreement the two firms reached on Tuesday in the provincial capital of Jinan.

The Weichai Holding Group Co Ltd, a subsidiary of Shandong Heavy Industry Co Ltd, will pay 374 million euros ($292.7 million) for a 75-percent stake in the Ferretti Group, which is restructuring its assets.

Chairman of Weichai Tan Xuguang said that the company has set the yachtmaking industry as a strategically important target for the next five years, adding that the Ferretti Group is an ideal partner in this regard because of its well-known brand, advanced technology and high-quality products.

The acquisition will also fully optimize Ferretti's capital structure, allowing the company to increase its capital by more than 100 million euros and decrease its debt to about 100 million euros, Tan said.

Ferretti is a world leader in the design, construction and sale of yachts, with a portfolio of prestigious brands.

However, the company has been facing financial difficulties, as the company's lenders have been involved in leveraged buyouts that have left the company heavily indebted. The yacht market has also been hit by the global financial crisis in recent years.

Founded in 1946, the Weichai Group is one of China's largest heavy-duty vehicle and auto equipment manufacturing companies.

"Cooperation between Weichai and Ferretti will help Ferretti products enter emerging markets and improve the comprehensive competitiveness of Ferretti in terms of product cost, follow-up service and financial strength," Tan said.

The Weichai Group acquired Moteurs Bauduin SA, a French manufacturer of diesel engines and gearboxes, in 2009. Weichai has since invested more than 30 million euros in expanding the company's manufacturing scope and improving its research ability.

China has been emerging as a new market for yacht consumption with the growth of social affluence and the development of marine tourism. China imported three times more yachts in 2010 than it did in 2009. Analysts say China's yacht market will witness rapid growth in the next five to ten years.

Driven by robust economic growth and the government's supporting policies, Chinese firms has been on a buying spree during the past year.

Chinese companies made 110 overseas acquisitions last year, a growth of 93 percent from the previous year. The disclosed transaction amount reached $28.1 billion, up 112.9 percent year-on-year, according to statistics from the Zero2IPO Research Center, a service provider in China's venture capital and private equity industry.

China's overseas investments are likely to grow 20 to 30 percent annually in the next two to three years, an Ernst & Young report said.

Deputy Commerce Minister Chen Jian said at an investment forum in November 2011 that China's overseas investments have boosted its own growth and contributed positively to recipient countries.

Edited by Chen Zhilin

Source: English.news.cn