Genworth Financial acquisition delayed again

Newest agreement extends transaction through Sept. 30

Published June 30, 2020 by Sydney Lake

The $2.7 billion acquisition of Henrico County-based Genworth Financial Inc. by China-based Oceanwide Holdings Group Co. Ltd. has been postponed — yet again — the companies announced Tuesday.

The Virginia State Corporation Commission’s Bureau of Insurance reapproved the merger, and the companies agreed to a 15th waiver and agreement to each party’s right to terminate the proposed agreement. The latest waiver extends the deal from June 30 to Sept. 30.

The Fortune 500 insurance company first announced the proposed takeover by China Oceanwide in 2016, but its completion has been pushed back repeatedly due to review by government regulators. Genworth says this newest extension allows time to address its approximately $1 billion in debt maturing in 2021.

“Genworth expects these steps to include a debt offering in the near term and taking the necessary steps to launch a 19.9% IPO [initial public offering] of its U.S. Mortgage Insurance business, subject to market conditions, in the event the China Oceanwide transaction is terminated,” says the company’s Tuesday statement.

Genworth says the extension also gives Oceanwide more time to finalize its own financing for the transaction, which could include debt funding up to $1.8 billion through Honey Capital and other third parties. The financing has been delayed due to the pandemic, Oceanwide told Genworth.

“We heard from our stakeholders that they would like greater assurance that the Oceanwide transaction is making progress towards closing,” Genworth President and CEO Tom McInerney said in a statement. “This extension and associated milestones address stakeholders’ concerns and provide our board with the flexibility to execute on our strategic priorities and maximize shareholder value while we continue to work with Oceanwide to close the transaction.

“We continue to believe the transaction represents the best and most certain value for Genworth’s shareholders.”

Under the newest extension of the Oceanwide deal, Genworth has the right to terminate the merger agreement Aug. 31 if conditions are not met.

Genworth in December 2019 completed the sale of the majority stake in its Canadian mortgage insurance company, which was required by Canadian regulators before Oceanwide could acquire Genworth. In March, the New York State Department of Financial Services reapproved Oceanwide’s proposed acquisition of Genworth’s New York-based insurance company, Genworth Life Insurance Company of New York.