Genworth Acquisition Delayed Again As China And Canada Review Plan

With approvals from government regulators in China and Canada still outstanding, Henrico-County-based Genworth Financial Inc. has again delayed the closing of its planned acquisition by a China-based investment company.

Genworth and China Oceanwide Holdings Group Co. Ltd announced the latest extension of their merger agreement late Thursday afternoon, just one day before the previous deadline expired.

The companies said they now have extended the deadline to complete the merger from March 15 to April 30.

Genworth, a seller of mortgage insurance and long-term care insurance, first announced the $2.7 billion acquisition in October 2016, and the company's shareholders approved the deal in March 2017.

However, the companies have since delayed completing the acquisition multiple times because of regulatory reviews by numerous state and federal government agencies in the United States and foreign government agencies.

The latest extension means the companies may have to rework some financial terms of the deal.

China Oceanwide had previously agreed to provide $1.5 billion in capital to Genworth over time after the closing of the merger. But Genworth said Thursday that if the closing extends beyond March 31, the initial tranche of that $1.5 billion capital plan, along with a $175 million post-closing capital commitment to Genworth Life Insurance, "would need to be adjusted."

The companies have received all the approvals needed by state and federal regulators in the United States except for the U.S. Financial Industry Regulatory Authority, or FINRA. Genworth said Thursday that pursuant to FINRA rules, "the transaction may proceed and closing may occur before such approval is obtained."

The holdup now is in China and Canada. China Oceanwide still needs to get clearance from the Chinese government for currency conversion and the transfer of funds to complete the acquisition.

Genworth said in December that the companies had developed a contingency plan if approval in China is not obtained, under which China Oceanwide's Chairman Lu Zhiqiang would use assets from outside mainland China to complete the acquisition.

Genworth said discussions with regulators in Canada have been "focused on national security matters, including data protections and the safeguarding of our customers' personally identifiable information."

Similar concerns were raised by the Committee on Foreign Investment in the United States, or CFIUS, when that joint committee of U.S. government agencies reviewed the deal. The companies were able to get clearance from CFIUS last year by agreeing to use a U.S.-based third-party service provider to manage and protect the data of its U.S. policyholders.

Genworth stock closed at $3.81 Thursday on the New York Stock Exchange. The deal values Genworth at $5.43 per share in cash.

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