Genworth to move forward on $2.7B acquisition by Chinese company
Companies look to close transaction by Sept. 30
Henrico County-based Genworth Financial Inc. announced Monday that it does not intend to exercise its right to terminate the $2.7 billion merger agreement with China-based Oceanwide Holdings Group Co. Ltd. as of Aug. 31.
According to a statement from Genworth, the insurance company’s board of directors and management team determined that Oceanwide provided satisfactory information regarding its funding plan for the $2.7 billion purchase.
“Over the past few months, [Genworth President and CEO Tom McInerney] and I have been in regular discussions with China Oceanwide with respect to their efforts to obtain financing for the transaction,” James Riepe, non-executive chairman of the Genworth board, said in a statement. “Based on these discussions and the information provided by Oceanwide, we believe the funding is progressing well and that Oceanwide is working to close the transaction by Sept. 30, 2020. Therefore, the board determined not to exercise our right to terminate the merger agreement at this time.”
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.
Both McInerney and Oceanwide Chairman Lu Zhiqiang addressed how the pandemic also has slowed down the acquisition process.
“We believe there is significant future value in bringing long term care (LTC) insurance expertise to China and the rest of Asia, and thus remain committed to the transaction,” Zhiqiang said in a statement. “We are pleased that, despite the constraints imposed by the global pandemic, we have been making very good progress to finalize the financing plan so that we can meet the Sept. 30, 2020 closing date.”
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.