Mortgage insurer Genworth Financial has terminated its merger agreement with China Oceanwide Holdings Group, allowing it to pursue its revised strategic plan without restrictions and without uncertainty regarding its ultimate ownership.
The proposed acquisition had initially been set for June 30th, 2019, however this date was pushed back by five months in order to give Genworth time to explore the sale of its Canadian business, Genworth MI Canada Inc.
Then, in March of 2020, the companies announced that the merger could be further delayed due to operational disruptions arising from the COVID-19 pandemic, before a deadline of no later than September 30th, 2020 was announced at the end of June.
After confirming the new merger date, it was announced that Oceanwide had reached an agreement with Hony Capital on the key commercial terms and conditions of its $1.8 billion offshore financing plan to complete the acquisition of Genworth.
Back in December, the pair received confirmation of the acceptance of filing from the National Development and Reform Commission (NDRC) in China, which had appeared to take the merger closer to completion.
However, yesterday, Genworth said that it has exercised its right to terminate its merger agreement with China Oceanwide.
The pair will continue to explore potential opportunities to bring long-term care insurance and other similar products to the Chinese insurance market in the future.
Genworth has already executed important steps under its revised strategic plan, including the sale of Genworth’s interest in its Australian mortgage insurance business and actions to align its expense structure with current business activities.
James Riepe, non-executive chairman of the Genworth 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 maximise 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.”
Tom McInerney, Genworth President and CEO, commented: “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 ageing population in China. Both parties believe there are significant, compelling opportunities to address critical societal needs outside of the U.S.”