Genworth Financial scraps $2.7bn merger deal with China Oceanwide

US insurance company Genworth Financial said that it has exercised its right to scrap its $2.7 billion merger deal with Chinese investment company China Oceanwide owing to regulatory obstacles.

The deal was signed way back in October 2016 under which China Oceanwide was to acquire Genworth Financial for $5.43 per share in cash.

However, it struggled to get the required regulatory approvals on fears of Chinese getting access to sensitive data of American citizens through the deal.

James Riepe – non-executive chairman of the Genworth Financial Board of Directors said: “Genworth’s Board of Directors has concluded that Oceanwide will be unable to close the proposed transaction within a reasonable time frame and that greater clarity about Genworth’s future is needed now in order for the Company to execute its plans to maximize shareholder value. Thus, the Board decided to terminate the Oceanwide merger agreement.

“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.”

Genworth Financial scraps $2.7bn merger deal with China Oceanwide. Photo courtesy of Genworth Financial, Inc.

Genworth Financial said that scrapping the merger agreement enables it to implement its revised strategic plan without any curbs and without the lack of certainty about its ultimate ownership.

Under the revised strategic plan, Genworth Financial will pursue a potential partial initial public offering (IPO) of its US MI business. The IPO pursual will be based on market conditions and also the meeting of various conditions and approvals.

The company alongside China Oceanwide will also continue to look out for possible opportunities to roll out long-term care insurance and other similar products to China in the future.

Genworth Financial said that it has already carried out key steps under its revised strategic plan, which included the sale of its stake in its Australian mortgage insurance business.

Tom McInerney – Genworth Financial President and CEO said: “We are grateful for Oceanwide’s commitment to our planned transaction over the years.

“During that time, we together navigated significant market uncertainty and regulatory hurdles, a testament to both parties’ good faith efforts to complete the transaction. I would like to thank Chairman Lu for his commitment and partnership throughout this process.

“While we believe it is necessary and appropriate at this stage to terminate the transaction, Genworth continues to share Chairman Lu’s vision of bringing long-term care solutions to the aging population in China. Both parties believe there are significant, compelling opportunities to address critical societal needs outside of the U.S.”