The proposed acquisition of insurance giant Genworth Financial Inc. by a China-based investment firm is being delayed yet again and Genworth is now seeking a possible sale of its Canadian mortgage insurance business in an effort to complete the deal.
Henrico County-based Genworth said Monday that it has made no “substantive progress” in getting approval from Canadian government regulators for its proposed $2.7 billion acquisition by China Oceanwide Holdings Group Ltd.
As a result, Genworth said the companies have agreed to pursue “strategic alternatives” for the company’s interest in its Canadian mortgage insurance business, including a sale of that business unit.
“The transaction with Oceanwide has taken longer than any of us anticipated, and we owe it to our stockholders to close it as soon as possible,” said Tom McInerney, Genworth’s president and CEO.
Genworth and China Oceanwide said they had agreed to an 11th waiver to extend the deadline for completing the acquisition.
The previous deadline was June 30. It is now being extended to Nov. 30 to give Genworth time to “explore disposition options” for its Canadian operations.
It could require another extension to complete a disposition of the Canadian business, McInerney said.
“MI Canada is one of our top-performing businesses,” McInerney said in a statement released by the company Monday. “However, the lack of transparent feedback or guidance from Canadian regulators about their review left us no choice but to look at strategic alternatives for MI Canada that would eliminate the need for Canadian regulatory approval of the Oceanwide transaction.”
The Canadian mortgage insurance business generated about $526 million in revenue for Genworth in 2018, out of total revenue for the company of $8.43 billion. The business unit produced adjusted operating income of $187 million.
Genworth entered the Canadian market in 1995 and is the leading private mortgage insurer there.
“Another potential benefit of selling all or a portion of MI Canada would be the opportunity to use the proceeds to satisfy future debt maturities,” McInerney said.
A spokeswoman for Genworth said no formal discussions with buyers had occurred and that the company would engage with investment bankers to solicit interest from potential buyers.
Shares fell 0.81% to close at $3.68 Monday.
The proposed acquisition of Genworth, a seller of mortgage insurance and long-term care insurance, was first announced in October 2016. The company’s shareholders approved the deal in March 2017.
Since then, the completion of the acquisition has been postponed multiple times because of regulatory reviews by numerous state and federal government agencies in the U.S. and foreign government agencies.
State regulatory agencies, including the Virginia State Corporation Commission’s Bureau of Insurance and federal regulators in the U.S., have approved the deal. Regulators in China and Canada are still reviewing it.