Genworth-Oceanwide Delay Merger Three Months Due To COVID-19

Henrico County-based Genworth Financial Inc. has received all of the regulatory approvals needed for its planned acquisition by a China-based investment firm, but the companies are delaying the deal by as much as an additional three months because of the economic disruption caused by the coronavirus pandemic.

Genworth, an insurance company with thousands of employees in Virginia, said it has agreed to delay its planned acquisition by China Oceanwide Holdings Group Co. Ltd. for the 14th time since the deal was first announced in October 2016.

The companies have agreed to a waiver that extends the previous deadline of March 31 to complete the deal to no later than June 30, Genworth announced Tuesday.

The companies said they hope to close the deal by the end of May "if feasible," but the three-month extension "is a prudent step the parties are taking because of the significantly higher volatility and substantially reduced liquidity in the global financial markets due to the coronavirus pandemic, which has negatively impacted financing global acquisitions."

Genworth, which sells home mortgage and long-term care insurance, agreed to be acquired by China Oceanwide for $5.43 a share, or about $2.7 billion, in October 2016. Shares fell 8.13%, or 27 cents, to close at $3.05 Wednesday.

Genworth shareholders approved the acquisition in March 2017.

The deal has since been delayed numerous times as the companies have sought approvals from various regulatory agencies. Most recently, Genworth had to submit the deal for re-approval by state insurance regulators in New York, Virginia and Delaware.

The Virginia State Corporation Commission's Bureau of Insurance said Tuesday it has re-approved a plan that involves the controlling acquisition of two Virginia insurers - Genworth Life and Annuity Insurance Co. and its subsidiary Jamestown Life Insurance Co.

New York also re-approved the deal last week after the companies agreed to make a $100 million capital contribution to Genworth's New York-domiciled life insurance subsidiary at the closing of the proposed acquisition.

Oceanwide also is expecting to receive confirmation from the Delaware Department of Insurance that the acquisition of Genworth's Delaware domiciled insurer may proceed under an existing approval from that agency.

Genworth said Wednesday that Oceanwide has been able to extend a financing arrangement for the deal until June 30. Oceanwide's financing arrangement includes debt funding of up to $1.8 billion through Hony Capital to partially finance the acquisition.

Even with the approval of U.S. regulators, China Oceanwide still must get approval from the government in China for currency conversion to complete the deal.

In a statement, Lu Zhiqiang, chairman of Oceanwide, said his company remains committed to the deal.

"I believe the long-term value of Genworth to the Oceanwide family of companies remains very compelling," he said. "However, in light of the impact of the coronavirus pandemic on global financial markets, it makes sense to extend the merger agreement to June 30."

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