Oceanwide to buy U.S. insurer Genworth for $2.7 bln, extends Chinese M&A push (updated)

China Oceanwide Holdings

24/10/2016 05:05

* Oceanwide commits another $1.12 bln to cover debt, charges 
    * Deal subject to regulatory approvals 
    * Chinese outbound M&A at record $181 bln so far this year 
 
 (Adds details on China M&A, share moves, financial advisors) 
    By Denny Thomas 
    HONG KONG, Oct 24 (Reuters) - China Oceanwide Holdings Group 
Co has agreed to buy U.S. insurer Genworth Financial Inc  GNW.N  
for $2.7 billion in cash, the latest in a series of moves by 
Chinese firms to buy overseas assets as their domestic economy 
slows and the yuan weakens. 
    In a joint statement on Sunday, Genworth and privately held 
and family-owned China Oceanwide Holdings said the Chinese firm 
will pay $5.43 per share to acquire all the Richmond, 
Virginia-based firm's outstanding shares. The price is a modest 
4.2 percent premium to Genworth's Friday closing price. 
 urn:newsml:reuters.com:*:nASC09CF3 
    But the Beijing-based holding firm, little known but founded 
by well-connected Chinese businessman Lu Zhiqiang, agreed to 
commit another $1.12 billion towards Genworth debt maturing in 
2018 and life insurance claims charges, the statement said. Both 
firms' boards backed the deal, which remains subject to 
regulatory approvals and likely won't close before mid-2017. 
    The purchase comes amid a hectic year for Chinese buyers 
chasing overseas assets. So far, 2016 has seen mainland firms 
launch a record $181 billion of overseas mergers and 
acquisitions - about 70 percent more than the whole of last 
year.  urn:newsml:reuters.com:*:nL3N1BC19L 
    Chinese investment holding firms have joined insurers like 
Fosun International Ltd  0656.HK  and unlisted Anbang Insurance 
Group in leveraging accumulated capital to buy global assets. 
Some recent purchases have also come from Chinese property 
companies, keen to reduce reliance on their home market. 
    Some recent Chinese bids have attracted intense regulatory 
scrutiny overseas. But rarely has an insurance deal by a Chinese 
acquirer been blocked outright by international watchdogs, 
according to people familiar with these transactions.  
    In some cases Chinese buyers have also been paying top 
dollar to secure insurance assets. Thaihot Group  000732.SZ  
paid nearly three times Dah Sing Financial Holdings Ltd's  
 0440.HK  2015 embedded value in a recent $1.4 billion purchase. 
That was more than double the valuation at which a previous Hong 
Kong insurance deal was done.  urn:newsml:reuters.com:*:nL4N18U3M2 
    Beijing-based China Oceanwide - described by Genworth 
President & Chief Executive Officer Tom McInerney as "an ideal 
owner" going forward - is also the controlling shareholder of 
Hong Kong-listed China Oceanwide Holdings Ltd  0715.HK , worth 
about $1.6 billion by market value. 
    McInerney said the capital commitment from China Oceanwide 
would strengthen Genworth's business, increasing the likelihood 
of obtaining regulatory approval. 
    The parent group's operations span financial services, 
energy, culture and media, and real estate assets globally, 
employing more than 10,000 employees worldwide. 
    Genworth, which traces its roots back to 1871 and went 
public in 2004, has mortgage insurance operations in the United 
States, Canada and Australia, well as U.S. life insurance 
business. Shares in Genworth's Australia unit, Genworth Mortgage 
Insurance Australia Ltd  GMA.AX , rose 1.9 percent on Monday on 
the news.  urn:newsml:reuters.com:*:nL4N1CT0OI 
    Goldman Sachs  GS.N  and Lazard  LAZ.N  are acting as 
financial advisors to Genworth. Citigroup  C.N  and Willis 
Capital Markets & Advisory are acting as financial advisors to 
China Oceanwide, according to the statement. 
 
 (Reporting by Denny Thomas; Editing by Kenneth Maxwell) 
 ((denny.thomas@thomsonreuters.com; +852 2843 6358; Reuters 
Messaging: denny.thomas.thomsonreuters.com@reuters.net)) 
 
Keywords: GENWORTH FINCL CHINA OCEANWIDE/