Mortgage insurer Genworth Financial and China Oceanwide Holdings Group have confirmed that their long-delayed merger agreement is still set to go ahead this month, following approval of Oceanwide’s funding plans.
Genworth said that it was satisfied with the funding plans for the $2.7 billion deal, and therefore does not intend to exercise its right to terminate the merger agreement as of August 31, 2020.
James Riepe, Non-Executive Chairman of the Genworth Board, and Tom McInerney, President and CEO of Genworth, commented on the new development.
“Over the past few months, Tom and I have been in regular discussions with China Oceanwide with respect to their efforts to obtain financing for the transaction,” said Riepe.
“Based on these discussions and the information provided by Oceanwide, we believe the funding is progressing well and that Oceanwide is working to close the transaction by September 30, 2020. Therefore, the Board determined not to exercise our right to terminate the merger agreement at this time.”
Originally set for June 30, 2019, Genworth first delayed its merger with Oceanwide to allow time to explore the sale of its Canadian business.
A later deadline set for March 2020 was then further pushed back due to operational disruptions caused by COVID-19.
“We are pleased with the progress Oceanwide has made towards securing the financing necessary to fund the transaction, which we continue to believe represents the best value for Genworth’s shareholders,” said McInerney.
“The August 31st milestone was important to both inform Genworth’s ongoing review process as well as provide an important update to our shareholders ahead of the September 30, 2020 deadline, particularly in light of the market disruptions driven by the global pandemic. I look forward to continuing our productive conversations with Oceanwide and working together to reach a timely and successful closing.”
LU Zhiqiang, Chairman of Oceanwide, also stated: “We believe there is significant future value in bringing long term care (LTC) insurance expertise to China and the rest of Asia, and thus remain committed to the transaction.”
“We are pleased that, despite the constraints imposed by the global pandemic, we have been making very good progress to finalize the financing plan so that we can meet the September 30, 2020 closing date.”