Gen­worth clears key federal review hur­dle in its pro­posed deal with China-based firm

Richmond Times-Dispatch Weekend - - LOCAL PERSPECTIVES - BY JOHN REID BLACK­WELL jblack­well@times­dis­patch.com (804) 775-8123 Bloomberg News con­trib­uted to this re­port.

Hen­rico County-based Gen­worth Fi­nan­cial Inc. cleared an im­por­tant hur­dle in its long-de­layed plan to be ac­quired by a Chin­abased fi­nan­cial firm.

The com­pany, an in­surer with thousands of em­ploy­ees in Vir­ginia, an­nounced Satur­day that the Com­mit­tee on For­eign In­vest­ment in the United States, or CFIUS, has cleared the pro­posed deal with China Ocean­wide Hold­ings Group Ltd.

CFIUS is a joint com­mit­tee of federal government agen­cies that re­views ac­qui­si­tions of U.S. firms by for­eign en­ti­ties for na­tional se­cu­rity con­cerns. Gen­worth said in a news re­lease that CFIUS has com­pleted its review of the deal and “con­cluded that there are no un­re­solved na­tional se­cu­rity con­cerns with re­spect to the pro­posed trans­ac­tion.”

Gen­worth and China Ocean­wide first an­nounced the $2.7 bil­lion ac­qui­si­tion in Oc­to­ber 2016, and Gen­worth share­hold­ers ap­proved it in March 2017.

Since then, the deal has been de­layed by state and federal government reg­u­la­tory re­views, in­clud­ing the CFIUS review. The ac­qui­si­tion still needs to get reg­u­la­tory ap­proval in China and in sev­eral U.S. states, af­ter the com­pa­nies al­tered the cap­i­tal struc­ture of the deal last month.

As part of its ef­forts to get the federal government’s ap­proval, Gen­worth agreed to use a U.S.-based third-party ser­vice provider to man­age and pro­tect the data of its U.S. pol­i­cy­hold­ers.

“We are pleased that CFIUS has com­pleted its review of our trans­ac­tion and look for­ward to work­ing with Ocean­wide to ob­tain the re­main­ing reg­u­la­tory ap­provals needed and sat­isfy other con­di­tions nec­es­sary to close the trans­ac­tion as soon as pos­si­ble,” said Thomas McIn­er­ney, Gen­worth’s pres­i­dent and CEO, in a state­ment.

McIn­er­ney has called the China Ocean­wide deal the “best op­tion” for the com­pany af­ter it was hit by losses on its long-term­care cov­er­age, which pays for nurs­ing-home stays or home-health aides.

CFIUS has made news this year by re­ject­ing some pro­posed ac­qui­si­tions of U.S. com­pa­nies by Chin­abased firms, in­clud­ing the pro­posed sale of mon­ey­trans­fer ser­vice Money­gram to Ant Fi­nan­cial, an af­fil­i­ate of Chi­nese com­pany Alibaba.

CFIUS re­views are con­fi­den­tial, and the panel de­clined to com­ment on the Gen­worth de­ci­sion. In its most re­cent re­port to Congress, CFIUS high­lighted that in­sur­ance is among the in­dus­tries the panel pays par­tic­u­lar at­ten­tion to be­cause in­sur­ers hold po­ten­tially sen­si­tive data about peo­ple and busi­nesses that are im­por­tant to na­tional se­cu­rity.

The ap­proval comes as Pres­i­dent Don­ald Trump has stopped two for­eign deals since tak­ing of­fice in 2017: Broad­com Ltd.’s hos­tile takeover of Qual­comm Inc., and Lat­tice Semi­con­duc­tor Corp.’s sale to a Chi­nese-backed firm.

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