Genworth kills long-delayed $2.7B acquisition

Acquisition by China's Oceanwide Holdings Group had been pending since 2016

Published April 6, 2021 by Richard Foster

Henrico County-based Fortune 500 insurer Genworth Financial Inc. announced Tuesday that it has formally terminated its long-delayed $2.7 billion acquisition by China-based Oceanwide Holdings Group Co. Ltd.

The news follows a Jan. 5 announcement by Genworth that it was putting a hold on the deal, first announced in 2016. At the same time, the company said it would be exploring a contingency plan that included a potential partial initial public offering (IPO) of the company’s mortgage insurance business. That would help the business meet its $1 billion in debt obligations due this year. During a special shareholders meeting in early January, Genworth President and CEO Tom McInerney said that the company is planning the IPO for the first half of 2021.

“Genworth’s Board of Directors has concluded that Oceanwide will be unable to close the proposed transaction within a reasonable time frame and that greater clarity about Genworth’s future is needed now in order for the  company to execute its plans to maximize shareholder value. Thus, the Board decided to terminate the Oceanwide merger agreement,” said James Riepe, non-executive chairman of the Genworth Board of Directors, said in a statement. “Although disappointed after more than four years of efforts, I want to especially thank our shareholders, regulators, policyholders, customers and employees, for their patience and support as we all persevered through an especially long and arduous cross-border approval process.”

“We are grateful for Oceanwide’s commitment to our planned transaction over the years,” McInerney said in a statement. “While we believe it is necessary and appropriate at this stage to terminate the transaction, Genworth continues to share [Oceanwide] Chairman Lu’s vision of bringing long-term care solutions to the aging population in China. Both parties believe there are significant, compelling opportunities to address critical societal needs outside of the U.S.”

In late November 2020, the two companies announced that Oceanwide’s acquisition of Genworth had been reapproved by China’s National Development and Reform Commission, and the acquisition, which has been frequently postponed since 2016, was previously delayed until Dec. 31, 2020.

According to company statements, financing, COVID-19-related restrictions and regulatory hurdbles have been to blame for the acquisition’s continued delays.

Genworth employs approximately 3,500 people, according to U.S. Securities and Exchange Commission filings made in 2018. In 2019, the company reported $343 million in net income.