Friday, April 16, 2021

No. 417: Genworth Terminates Its Agreement with China Oceanwide

On October 21, 2016, Genworth Financial, Inc. (Genworth) entered into a merger agreement with China Oceanwide (Oceanwide). Since then, the parties have entered into sixteen "waiver agreements," under each of which the parties extended the "end date" in the original merger agreement. My two most recent updates on the situation are in No. 395 (October 26, 2020) and No. 406 (January 8, 2021).

The 8-K Report and News Release
On April 6, 2021, Genworth filed with the Securities and Exchange Commission an 8-K (significant event) report. Attached to the 8-K is a news release entitled "Genworth Announces Termination of Merger Agreement with Oceanwide." Here is the first paragraph of the news release (the full news release is here):
Genworth Financial, Inc. (NYSE: GNW) (Genworth, the Company) today announced that it has exercised its right to terminate the merger agreement with China Oceanwide Holdings Group Co., Ltd. (Oceanwide) as of April 6, 2021. Terminating the agreement allows Genworth to pursue its revised strategic plan without restrictions and without uncertainty regarding its ultimate ownership, which might impact the Company's ability to successfully execute the plan.
General Observations
During the more than four years since the merger agreement between Genworth and Oceanwide was originally signed, many federal and state regulators in the United States, as well as regulators in Canada and China, have poured a tremendous amount of effort into trying to approve the agreement.

From the beginning, I have been deeply concerned about the potential impact of the agreement on Genworth's policyholders, especially its long-term care insurance policyholders. For that reason, I am relieved that the agreement has been terminated.