A U.S. regulating authority which reviews foreign investment on national security projects has approved China Oceanwide Group's bid of $2.7 billion to buy Richmond based American insurer Genworth Financial Inc. Both companies announced this on Saturday.
The negotiation between the two entities started in October 2016. According to Reuters, China Oceanwide Group offered $2.7 billion in cash or $5.43 per share, in its bid to acquire Genworth Financial. Genworth's current trading rate is $3.81 per share.
Genworth and Oceanwide stated on Saturday that the Committee on Foreign Investment in the United States (CFIUS) has completed its review process of both the companies' proposed transaction and it has found no unresolved national security concerns with respect to the deal.
CFIUS further added: "This satisfies one of the conditions to the closing of the proposed transaction." China Oceanwide Holdings is a well-known entity which deals in real-estate and financial services. The company is chaired by Chinese business tycoon Lu Zhiqiang. The entity was founded in the year in 1985 and since its foundation, it has grown up to become one of the most successful financial service providers in China.
Genworth Financial Inc. is one of the top players in the field of insurance business in the United States. It is listed as a Fortune 500 insurance holding company and it has gained the reputation of being one of the most trusted insurance service providers in the country throughout years.
CFIUS has recently been skeptical in terms of securing sensitive data of the citizens of the U.S. Recently, Ant Financial, the financial wing of Chinese billionaire Jack Ma's Alibaba Group, was unable to obtain the approval from CFIUS, in their bid to acquire American money transfer giant MoneyGram International Inc. CFIUS was not convinced of it as the deal didn't satisfy the mitigation concerns of safety of personal data of American Citizens.
Genworth Financial Inc. and China Oceanwide went into a "Mitigation Agreement" as a part of their proposed transaction. This agreement will require Genworth to use a US-based third-party service provider to protect the personal identification data of Genworth's US-based customers and policyholders. The agreement, in turn, satisfied the terms and conditions of CFIUS, based on which the authority gave the approval to China Oceanwide's acquisition of Genworth.
Despite, CFIUS' green signal, the proposed transaction is still left to obtain regulatory approvals in the U.S. and China. Now, it is to see, what comes next on both the companies' fate.
