Genworth’s $2.7B acquisition by Chinese company faces new hurdle

Oceanwide Holdings reaches capital agreement, but not all terms, conditions met

Published October 1, 2020 by Sydney Lake

Henrico County-based Genworth Financial Inc. announced Thursday that China-based Oceanwide Holdings Group Co. Ltd. has reached an agreement with Hony Capital on the commercial terms and conditions of its $1.8 billion offshore financing plan to complete its acquisition of Genworth.

However, Oceanwide has not reached a final agreement on all terms and conditions due to pandemic-related challenges including travel restrictions and mandatory quarantine requirements — therefore the $2.7 billion acquisition has been delayed yet again. 

The companies also announced Thursday they have agreed to a 16th waiver and agreement of each party’s right to terminate their previously announced merger agreement. This extends the previous deadline of Sept. 30 to no later than Nov. 30.

On Sept. 1, Genworth agreed not to exercise its right to terminate the $2.7 billion merger agreement after Oceanwide provided satisfactory information about its ability to secure financing for the acquisition.

“We have overcome many hurdles during the past four years, demonstrating time and again our unwavering commitment to this transaction,” Oceanwide Chairman L Zhiqiang said in a statement. “The COVID-19 pandemic has presented a unique set of challenges to deal-making that traditionally relies on face-to-face communications, which is why the additional time is necessary to finalize these remaining steps. Despite these latest challenges, we remain committed to securing financing for the transaction in order to close the transaction as soon as possible.”

On June 30, the acquisition of Genworth by Oceanwide Holdings was postponed yet again. 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. In June, 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. 

“As we extend the waiver and agreement again, it is important to remember that it wasn’t until the end of March 2020 that we received substantially all the regulatory approvals needed to close the transaction,” Genworth President and CEO Tom McInerney said in a statement. “That put Oceanwide in the difficult position of completing the funding process in the middle of a global pandemic. I recognize that this has been an extraordinarily long road to travel for our shareholders, regulators, employees and other stakeholders, and we greatly appreciate their patience. We are committed to continuing to work with Oceanwide to close the transaction because we believe that the transaction represents the best value for Genworth’s shareholders.”

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 Co. of New York.

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