Every time China Oceanwide's proposed acquisition of Genworth Financial has overcome a regulatory hurdle or other hurdle, another has emerged to delay the deal.
Now, after more than four years of trying, Genworth has closed the deal and will instead pursue its alternative plans, including a partial IPO of its US mortgage insurance business.
"The Genworth Board of Directors has determined that Oceanwide will not be able to complete the proposed transaction in a timely manner and that more clarity is needed now about Genworth's future in order for the company to execute on its plans to maximize shareholder value," says James Riepe. its non-executive chairman said in a press release. "As a result, the board has decided to terminate Oceanwide's merger agreement."
The US MI business has been a bright spot for Genworth in recent years compared to its difficult long-term care insurance segment. In the fourth quarter of 2020, MI had adjusted operating income by $ 95 million, compared to $ 141 million in the third quarter and $ 160 million in the fourth quarter of 2019.
However, $ 27 billion was taken out on new insurance in the fourth quarter of 2020, up from $ 26.6 billion in the third quarter and $ 18.7 billion in the fourth quarter of 2019.
Genworth has already begun its Plan B in motion with the sale of its remaining stake in the Australian mortgage insurance business on March 2nd through a signed agreement.
Approximately $ 247 million was used to repay a note in connection with the settlement with AXA. This gave Genworth net proceeds of $ 123 million.
It wasn't until last October that Genworth pointed to a happy ending to the long-running saga (the deal was first announced in October 2016). China Oceanwide had apparently received funding commitments to fund the deal, but certain regulatory approvals were still required.
However, when December 31st had passed and no transaction had completed, the formal deadline – which was extended 16 times – was not postponed for the 17th time. And Genworth's announcement, released after Tuesday's market closed, became inevitable.
Genworth has taken numerous steps to overcome regulatory hurdles for the Oceanwide Agreement, including preparing a data protection plan to gain approval from the US Foreign Investment Committee. In August 2019, Genworth also sold its remaining stake in its MI Canadian subsidiary
At 6:30 p.m. in after-hours trading on April 6, Genworth stock fell $ 0.07 per share to $ 3.44 from its closing price earlier in the day at $ 3.51.