China Oceanwide Holdings Group Co (中泛控股集團) has agreed to buy US insurer Genworth Financial Inc for US$2.7 billion in cash, the latest in a series of moves by Chinese firms to buy overseas assets as their domestic economy slows and the yuan weakens.
In a joint statement on Sunday, Genworth and privately held and family-owned China Oceanwide said the Chinese firm is to pay US$5.43 per share to acquire all of the Richmond, Virginia-based firm’s outstanding shares.
The price is a modest 4.2 percent premium over Genworth’s closing price on Friday last week.
However, the Beijing-based holding firm — little known, but founded by well-connected Chinese businessman Lu Zhiqiang (盧志強) — agreed to commit another US$1.12 billion toward Genworth debt maturing in 2018 and life insurance claims charges, the statement said.
Both companies’ boards backed the deal, which remains subject to regulatory approvals and likely will not close before the middle of next year.
The purchase comes amid a hectic year for Chinese buyers chasing overseas assets. So far, this year has seen Chinese firms launch a record US$181 billion of overseas mergers and acquisitions — about 70 percent more than the whole of last year.
Chinese investment holding firms have joined insurers like Fosun International Ltd (復星國際) and unlisted Anbang Insurance Group Co (安邦保險集團) in leveraging accumulated capital to buy global assets. Some recent purchases have also come from Chinese property companies, keen to reduce reliance on their home market.
Some recent Chinese bids have attracted intense regulatory scrutiny overseas. However, rarely has an insurance deal by a Chinese acquirer been blocked outright by international watchdogs, according to people familiar with these transactions.
In some cases, Chinese buyers have also been paying top dollar to secure insurance assets.
Thaihot Group Co Ltd (泰禾集團) paid nearly three times Dah Sing Financial Holdings Ltd’s (大新金融集團) embedded value last year in a recent US$1.4 billion purchase. That was more than double the valuation at which a previous Hong Kong insurance deal was done.
Beijing-based China Oceanwide — described by Genworth president and CEO Tom McInerney as “an ideal owner” going forward — is also the controlling shareholder of Hong Kong-listed China Oceanwide Holdings Ltd (中泛控股有限公司), worth about US$1.6 billion by market value.
McInerney said the capital commitment from China Oceanwide Holdings Group would strengthen Genworth’s business, increasing the likelihood of obtaining regulatory approval.
The parent group’s operations span financial services, energy, culture, media and real-estate assets globally, employing more than 10,000 employees worldwide.
Genworth, which traces its roots back to 1871 and went public in 2004, has mortgage insurance operations in the US, Canada and Australia, as well as the US life insurance business.
Shares in Genworth’s Australia unit, Genworth Mortgage Insurance Australia Ltd, yesterday rose 1.9 percent on the news.
Goldman Sachs Group Inc and Lazard Ltd are acting as financial advisors to Genworth. Citigroup Inc and Willis Capital Markets & Advisory are acting as financial advisors to China Oceanwide Holdings Group, the statement said.
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
RSS