Genworth Financial Agrees to Takeover
October 23 2016 - 9:10PM
Dow Jones News
Chinese investment firm China Oceanwide Holdings Group Co. said
it agreed to buy U.S.-based insurer Genworth Financial Inc. for
about $2.7 billion.
China Oceanwide has been pouring hundreds of millions of dollars
into U.S. commercial and residential property in the past two
years. The privately held firm which is based in Beijing, was
founded by Lu Zhiqiang. China Oceanwide will pay $5.43 a share in
cash for shares of Genworth, which closed trading on Friday at
$5.21.
The deal comes as Genworth struggles under a money-losing
long-term care business and has already stopped selling traditional
life and fixed annuities as part of a cost-cutting move. Genworth,
which is based in Richmond, Va., traces its roots back to 1871 and
became a public company in 2004.
As part of the transaction, China Oceanwide will contribute
about $600 million of cash to address Genworth's debt maturing in
2018 and $525 million of cash to the firm's U.S. life insurance
businesses.
Separately, Genworth disclosed preliminary charges unrelated to
the transaction of $535 million to $625 million associated with
long-term care insurance claim reserves and taxes.
"The China Oceanwide transaction is the result of an active and
extensive review process conducted over the past two years under
the supervision of the Board and with guidance from external
financial and legal advisers," said James Riepe, nonexecutive
chairman of Genworth.
China Oceanwide said the transaction will help facilitate
Genworth's ability to complete its previously announced U.S.
life-insurance restructuring plan. Following completion of the
deal, Genworth will be a stand-alone subsidiary of China Oceanwide
and Genworth's senior management team will continue to lead the
business from its current headquarters in Richmond.
"In acquiring Genworth and contributing $1.1 billion of
additional capital, we are providing crucial financial support to
Genworth's efforts to restructure its U.S. life insurance
businesses," said Mr. Lu, adding "we have structured the
transaction with the intention of increasing the likelihood of
obtaining regulatory approval."
The transaction, which has been approved by both companies'
boards, is expected to close by the middle of 2017, subject to the
receipt of regulatory approvals. Both China Oceanwide and Genworth
have initiated discussions with regulators in key jurisdictions,
according to the companies.
Write to Geoffrey Rogow at geoffrey.rogow@wsj.com
(END) Dow Jones Newswires
October 23, 2016 20:55 ET (00:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Genworth Financial (NYSE:GNW)
Historical Stock Chart
From Aug 2024 to Sep 2024
Genworth Financial (NYSE:GNW)
Historical Stock Chart
From Sep 2023 to Sep 2024