China Renews OK of Oceanwide’s Stalled $2.7 Billion Purchase of Genworth
U.S.-based Genworth Financial Inc. reported that Chinese officials have renewed their approval of China Oceanwide Holdings Group’s acquisition of Genworth’s Delaware-domiciled insurer, allowing the deal to proceed to meet other regulatory requirements.
The deal was originally proposed in 2016, but hit U.S. regulatory roadblocks.
With the recent re-approval from the National Development and Reform Commission (NDRC) in China, Oceanwide said it will now move forward with the remaining regulatory steps required to close the transaction, including seeking clearance for currency conversion and transfer of the balance of the transaction funds and obtaining approval from the Delaware Department of Insurance.
To allow additional time for Oceanwide to complete these final steps, the parties said they are working on an extension of the waiver and agreement of each party’s right to terminate their previously announced merger agreement until not later than Dec. 31, 2020. The parties had originally hoped to close by Nov. 30, 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.
The original deal was announced in October 2016 when Oceanwide agreed to pay $2.7 billion in cash to acquire Genworth. The deal was stalled over concerns by the Committee on Foreign Investment in the United States (CFIUS) about Chinese access to sensitive U.S. personal data. That panel eventually approved the deal in June 2018 after Genworth agreed to use a U.S.-based, third-party service provider to manage the data of its U.S. policyholders.
It was a rare win given that the United States has been blocking proposed Chinese investments in American companies to keep China from acquiring important technologies. In the same year, CFIUS rejected Ant Financial’s plan to acquire U.S. company MoneyGram International.
The North Carolina Department of Insurance has extended its previously-granted approval through Jan. 24, 2021. The transaction is still subject to confirmation by the Delaware Department of Insurance.
The securities industry’s self-regulatory body, the Financial Industry Regulatory Authority (FINRA), has confirmed that the transaction may close, the parties said.
“We are encouraged that Oceanwide continues to make progress on the remaining steps needed to complete the transaction,” said Tom McInerney, Genworth president and CEO. “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.”
“Securing these last few remaining regulatory approvals and finalizing our financing are important milestones in our efforts to close our transaction and fulfill our vision of bringing long term care insurance to China,” said LU Zhiqiang, chairman of Oceanwide.
Genworth Financial is a Fortune 500 insurance holding company that offers mortgage insurance and long term care insurance. It is headquartered in Richmond, Virginia.
Oceanwide is a privately held, family owned international financial holding group founded by LU Zhiqiang. Headquartered in Beijing, China, Oceanwide’s businesses include financial services, energy, technology information services, culture and media, and real estate assets globally, including in the United States.
Oceanwide is the controlling shareholder of the Shenzhen-listed Oceanwide Holdings Co., Ltd. and Minsheng Holdings Co. Ltd.; the Hong Kong-listed China Oceanwide Holdings Ltd. and China Tonghai International Financial Ltd. (formerly known as Quam Ltd.); the privately held International Data Group, Minsheng Securities, Minsheng Trust, and Asia Pacific Property & Casualty Insurance.
China Oceanwide also is a minority investor in Shanghai-listed China Minsheng Bank and Hong Kong-listed Legend Holdings.