In addition, Genworth and Oceanwide have agreed to a 14th waiver and agreement of each party's right to terminate the previously announced merger agreement


Oceanwide gets closer in completing its $2.7bn acquisition of Genworth Financial. (Credit: Genworth Financial, Inc.)

Genworth Financial, Inc. (NYSE: GNW) and China Oceanwide Holdings Group Co., Ltd. (Oceanwide) announced that the Virginia State Corporation Commission, Bureau of Insurance has reapproved the proposed acquisition of control by Oceanwide of Genworth’s insurance companies domiciled in Virginia.  With the Virginia regulator’s approval and previously received approvals and re-approvals, and subject to the receipt of the confirmations referenced below, Oceanwide has all regulatory approvals necessary to close the transaction.

In addition, Genworth and Oceanwide have agreed to a 14th waiver and agreement of each party’s right to terminate the previously announced merger agreement. The 14th waiver extends the previous deadline of March 31, 2020 to no later than June 30, 2020.

This 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.  The parties are targeting a closing date closer to the end of May, if feasible, but given the unprecedented market disruptions, Oceanwide and Genworth believe it is prudent to build in a cushion and extend the deadline to no later than June 30, 2020.  The parties expect that Oceanwide’s existing financing arrangement for debt funding of up to $1.8 billion through Hony Capital will be extended through June 30, 2020.

Under the waiver, Oceanwide waives Genworth’s ongoing compliance with certain covenants set forth in the merger agreement.  The waiver also provides termination rights for Oceanwide to the extent that regulators subsequently impose materially adverse conditions on the transaction, and other mutual termination rights for the parties.

As previously disclosed, the National Development and Reform Commission (NDRC) accepted Oceanwide’s filing with respect to the proposed acquisition of Genworth in October 2018, which concluded the NDRC’s review process.  Once Oceanwide has finalized its financing plan, Oceanwide will discuss currency conversion and transfer of funds with China’s State Administration of Foreign Exchange (SAFE).  Oceanwide is also seeking confirmation from the Delaware Department of Insurance that the acquisition of Genworth’s Delaware domiciled insurer may proceed under the existing approval, which Oceanwide expects to receive upon finalization of its financing.

“As I have said many times since we signed the merger agreement in 2016, Oceanwide remains fully committed to the Genworth transaction,” said LU Zhiqiang, chairman of Oceanwide. “I believe the long-term value of Genworth to the Oceanwide family of companies remains very compelling. 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, 2020.”

“Like Oceanwide, Genworth remains fully committed to closing the transaction as soon as possible.  The parties are very pleased with the progress made in receiving approval from the New York and Virginia regulators,” said Tom McInerney, President & CEO of Genworth. “We understand the necessity of the current extension in light of the unprecedented challenges in global financial markets.”

Source: Company Press Release