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