Brookfield Business Partners to Acquire Genworth’s Stake in Genworth MI Canada Inc.; Genworth and Oceanwide Agree to Extend Merger Agreement

2019 AUG 22 (NewsRx) -- By a News Reporter-Staff News Editor at Mergers & Acquisitions Daily News -- Genworth Financial, Inc. (NYSE: GNW) (“Genworth”) and Brookfield Business Partners L.P. (NYSE: BBU) (TSX: BBU.UN) (“Brookfield Business Partners”) announced an agreement for Brookfield Business Partners to purchase Genworth’s majority interest in Genworth MI Canada Inc. (Genworth Canada). Genworth Canada is the largest private sector residential mortgage insurer in Canada.

Pursuant to the share purchase agreement, Genworth Financial International Holdings, LLC (GFIH) and Genworth Mortgage Insurance Corporation (GMIC), each wholly owned indirect subsidiaries of Genworth, will sell all of the common shares in Genworth Canada (TSX: MIC, Head office: 2060 Winston Park Drive, Suite 300, Oakville, Ontario L6H 5R7) owned by them to Brookfield Business Partners (the “Transaction”). Genworth’s shares represent approximately 56.9% of Genworth Canada’s issued and outstanding common shares (the “Purchased Shares”).

GFIH currently holds 34,799,545 common shares, representing approximately 40.5% of Genworth Canada’s outstanding common shares, and GMIC currently holds 14,145,100 common shares, representing approximately 16.4% of Genworth Canada’s outstanding common shares. Upon closing of the Transaction, Genworth will no longer have beneficial ownership, control or direction over the Purchased Shares.

The purchase price is CAD$48.86 per share, reflecting a total transaction value of approximately CAD$2.4 billion. The purchase price is subject to certain adjustments, including for Genworth Canada’s payment of special dividends prior to the closing of the Transaction. Net cash proceeds from the transaction after adjusting for foreign exchange, fees and expenses are estimated to be approximately USD$1.8 billion.

The sale is targeted to close by the end of 2019 and is subject to other customary conditions, including approval under the Insurance Companies Act (Canada) and Competition Act (Canada).

Brookfield Business Partners also has agreed to provide Genworth Financial, Inc., with up to USD$850 million in bridge financing in the event regulatory approvals for the Transaction are not received by October 31, 2019.

As previously disclosed, Genworth is selling its stake in Genworth Canada to increase the likelihood of subsequently completing the acquisition of Genworth by China Oceanwide Holdings Group Co., Ltd. (Oceanwide) and its affiliates (the “Oceanwide Transaction”). Oceanwide has consented to the Transaction. In connection with Oceanwide’s consent to the Transaction, Genworth and Oceanwide entered into the 12th Waiver and Agreement extending the merger agreement deadline to not later than December 31, 2019.

Once all other regulatory processes are complete, the Oceanwide Transaction will still require clearance in China for currency conversion.

Genworth also believes that the sale of its stake in Genworth Canada would allow it to increase its financial flexibility, whether or not the Oceanwide Transaction is consummated. If the Transaction is not consummated, Genworth may decide to retain the Purchased Shares for investment purposes or to explore alternatives with respect to the Purchased Shares, which may include decreasing its beneficial ownership, control and direction over common shares of Genworth Canada through market transactions, private agreements or otherwise.

“We are pleased to find such a high-caliber buyer for our interest in Genworth Canada,” said Tom McInerney, president and CEO of Genworth Financial, noting that Brookfield Business Partners has a strong reputation as a long-term focused investor and offers deep expertise in the insurance and residential real estate sectors. “We look forward to working with Brookfield Business Partners through the sale process and required regulatory approvals and, ultimately, moving forward with our long-awaited closing of our merger with Oceanwide.”

Added LU Zhiqiang, chairman of Oceanwide: “We are pleased with the quality of the buyer as well as the purchase price they have offered. We share Genworth’s commitment to bringing this process to a successful conclusion and closing the transaction as soon as possible.”

Goldman Sachs & Co. LLC and Lazard Freres & Co. LLC are acting as financial advisors to Genworth. Osler, Hoskin & Harcourt LLP and Sullivan & Cromwell LLP are acting as legal advisors to Genworth and Richards, Layton & Finger is acting as legal advisor to the Genworth Board of Directors.

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