Genworth Financial Inc. and China Oceanwide Holdings Group Co. Ltd. today announced they have extended their merger negotiations agreement to Dec. 31.
The agreement was set to expire today.
China Oceanwide has been trying to acquire Genworth since October 2016. The companies said they now have received most of the regulatory approvals they need to consummate the $2.7 billion deal.
Genworth, a Richmond, Virginia-based insurer that has been a major issuer of life insurance and annuities, helped create the U.S. long-term care insurance (LTCI) market, and it continues to be a major mortgage insurance provider. The company continues to write some LTCI coverage and still has large closed blocks of life insurance and annuity business.
China Oceanwide is a Beijing-based real estate developer and financial services company, with commercial real estate properties and construction projects all over the world.
The companies said today that China’s National Development and Reform Commission has now extended acceptance of China Oceanwide’s Genworth acquisition filing.
The companies said that, to complete the deal, they still need:
- Approval from China’s State Administration of Foreign Exchange for China Oceanwide to convert Chinese currency into dollars and transfer the cash.
- Confirmation from the Delaware Department of Insurance that its earlier approval of the China Oceanwide-Genworth still applies.
The companies also need the blessing of regulators in Delaware because a major Genworth life insurance subsidiary has its official state of domicile in Delaware.
Genworth said Nov. 2 that it believed China Oceanwide had made significant progress in obtaining funding from Hony Capital, a private equity affiliate of Legend Holdings, which is a big Chinese investment company.
Hony Capital has big stakes in companies such as WeWork and PizzaExpress.
Genworth and China Oceanwide did not mention Hony Capital or other financial services companies in the announcement they put out today.
The China Oceanwide-Genworth deal agreement calls for Genworth to provide $175 million in cash for Genworth’s life insurance subsidiaries after the deal with China Oceanwide is completed. The life subsidiaries are the companies that wrote the LTCI business. The agreement also calls for China Oceanwide to make a $1.5 billion contribution to Genworth’s U.S. operations in three “tranches,” or slices, after the deal closes.
Genworth and China Oceanwide said today, in a comment about deal financing that, “The parties are also working on a 90-day extension of each of the three $500 million tranches under the post-close Oceanwide capital plan.”
Lu Zhiqiang, the chairman of China Oceanwide, referred generally to deal financing in a comment included in the new announcement.
“Securing these last few remaining regulatory approvals and finalizing our financing are important milestones in our efforts to close our transaction and fulfill our vision of bringing long term care insurance to China,” said Lu.
A publicly traded China Oceanwide real estate development affiliate based in Hong Kong has said, in English-language filings, that the COVID-19 has caused problems for many of its office buildings, shopping centers and construction projects.
The San Francisco Business Times reported in October that Hony Capital has been working to buy Oceanwide Center, a big commercial real estate project in San Francisco, from a China Oceanwide affiliate for $1.2 billion. Closing dates for that deal have been pushed back twice, and that deal is now set to close Dec. 31.
Genworth and China Oceanwide said in a cautionary note accompanying the announcement that have made forward-looking statements about a number of matters, including ”Oceanwide’s funding plans.”
“Actual outcomes and results may differ materially from those in the forward-looking statements and factors that may cause such a difference include, but are not limited to, risks and uncertainties related to: (i) the risk that Oceanwide will be unable to complete funding,” according to the cautionary note.
— Read Genworth Aims to Line Up Backup Financing Options, on ThinkAdvisor.