BY Fraser Tennant
Citing unreasonable time frames and a need for greater clarity as to its future, US insurance company Genworth Financial has terminated its long-delayed $2.7bn acquisition by privately owned investment company China Oceanwide.
First announced in 2016 and originally expected to close in the following year, regulatory hurdles and financing issues repeatedly delayed the acquisition, which was further complicated over the past year by the global coronavirus (COVID-19) pandemic.
“Our board of directors has concluded that China Oceanwide will be unable to close the proposed transaction within a reasonable time frame and that greater clarity is needed now in order for Genworth to execute its plans to maximise shareholder value,” said James Riepe, non-executive chairman of the Genworth board of directors. “Thus, the board decided to terminate the merger agreement.”
Genworth has stated that the termination will allow it to pursue its revised strategic plan without restrictions and without uncertainty regarding its ultimate ownership, which it believes may impact its ability to successfully execute the plan.
Those plans include a potential partial initial public offering (IPO) of Genworth's US mortgage insurance business, subject to market conditions as well as the satisfaction of various conditions and approvals. Genworth has already sold its interest in its Australian mortgage insurance business.
“We are grateful for China Oceanwide’s commitment to our planned transaction over the years,” said Tom McInerney, president and chief executive of Genworth. “During that time, we together navigated significant market uncertainty and regulatory hurdles, a testament to both parties' good faith efforts to complete the transaction.”
Despite the termination of the acquisition, Beijing-based China Oceanwide and Genworth have stated that they will continue to explore potential opportunities to bring long-term care insurance and other similar products to the Chinese insurance market in the future.
Mr Riepe concluded: “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.”
News: Insurer Genworth terminates $2.7 billion buyout deal with China Oceanwide