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The Chinese Buyers Are Back: China Oceanwide Acquires Genworth For $2.7 Billion

For more than half a year after China's Anbang "insurance" conglomerate mysteriously emerged out of nowhere, announcing its intentions to acquire US hotel chain Starwood, shortly before it even more mysteriously pulled its bid once questions about its source of funds emerged, Chinese M&A activity in the US was put in cryogenic sleep, with not even a peep out of Chinese companies desperate to launder their money in the US using legal methods, most notably mega mergers and acquisitions.

Today that changed when just as unexpectedly, China Oceanwide Holdings Group agreed to buy troubled US insurer Genworth Financial Inc. for $2.7 billion in cash, pledging to help the U.S. firm manage its debt and strengthen life insurance units after it was hurt by higher-than-expected losses tied to long-term care coverage. A China Oceanwide investment platform will pay $5.43 per share, the companies said Sunday in a statement. That’s 4.2% more than Genworth’s closing price of $5.21 Friday. The buyer also promised to provide $600 million to Genworth to address debt maturing in 2018, as well as $525 million to strengthen the life insurance businesses.

“Genworth is an established leader in both mortgage insurance and long-term care insurance, which are markets that present significant long-term growth opportunities,” China Oceanwide Chairman Lu Zhiqiang said in the statement. “We are providing crucial financial support to Genworth’s efforts to restructure its U.S. life insurance businesses.”

In recent months, Genworth CEO Tom McInerney has been selling assets to ensure the insurer has sufficient liquidity after it was hit by losses on its long-term care coverage, which pays for home-health aides and nursing home stays, and as low interest rates crimp returns. At that point, it was almost as if a white knight emerged for the troubled company, one from across the Pacific. China Oceanwide plans to let Richmond, Virginia-based Genworth operate as a standalone company after the takeover with senior management still in place, according to the statement. “Genworth is an established leader in both mortgage insurance and long-term care insurance, which are markets that present significant long-term growth opportunities,” China Oceanwide Chairman Lu Zhiqiang said in the statement. “We are providing crucial financial support to Genworth’s efforts to restructure its U.S. life insurance businesses.”

But who is this bidder/white knight? Very much like Anbang, it is a major financial conglomerate which spans real estate, energy and finance. It was founded in 1985 by Lu, who is a Communist Party secretary, as well as a member of the standing committee of the 12th Chinese People’s Political Consultative Conference, according to the company’s website.

More details from its website:

China Oceanwide Holdings Group was founded in 1985 by Mr. Lu Zhiqiang, the founder, legal representative, Communist Party secretary, and chairman of the group, as well as a member of the standing committee of the 12th Chinese People’s Political Consultative Conference, vice president of the China Non-governmental Chamber of Commerce, deputy...


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