Long-delayed Genworth acquisition postponed again

Acquisition by China-based Oceanwide Holdings Group delayed until Dec. 31

Published November 30, 2020 by Rich Griset

Henrico-based Genworth Financial Inc. and China-based Oceanwide Holdings Group Co. Ltd. announced on Monday that Oceanside’s long-delayed $2.7 billion acquisition of Genworth has been reapproved by China’s National Development and Reform Commission, and the acquisition has been postponed until the end of December.

With the Chinese government’s reapproval, Oceanwide will now move forward on the few remaining regulatory steps required to close its $2.7 billion acquisition of Genworth. Among those steps are seeking clearance for currency conversion, the transfer of the balance of the transaction funds from China’s State Administration of Foreign Exchange and obtaining confirmation from the Delaware Department of Insurance that the acquisition of Genworth’s Delaware-domiciled insurer may proceed under the existing approval.

To allow additional time for Oceanwide to complete these final steps, the parties are working on extending each party’s right to terminate their merger agreement until Dec. 31, 2020. The parties are also working on a 90-day extension of each of the three $500 million tranches under the post-close Oceanwide capital plan.

“We are encouraged that Oceanwide continues to make progress on the remaining steps needed to complete the transaction,” said Genworth President and CEO Tom McInerney in a statement.  “Although I am disappointed we could not close by Nov. 30, we are hopeful that we can close in the first half of December, but have agreed to an end date of Dec. 31, 2020 to allow more time for the remaining regulatory approvals to be achieved.”

Oceanwide’s acquisition of the Fortune 500 insurance company has been subjected to numerous delays since the companies announced they had entered an agreement on Oct. 23, 2016. 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.

On Oct. 1, 2020, Genworth announced that Oceanwide had reached an agreement with Chinese private equity firm Hony Capital on the commercial terms and conditions of its $1.8 billion offshore financing plan to complete its acquisition of Genworth. On that same date, the companies agreed to a 16th waiver and agreement of each party’s right to terminate their previously announced merger agreement. It extended the previous deadline of Sept. 30 to no later than Nov. 30. Oceanwide, however, had not reached a final agreement on all terms and conditions due to pandemic-related challenges including travel restrictions and mandatory quarantine requirements.

Last December, Genworth 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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