Shares of Genworth Monetary (NYSE:GNW) have plummeted in the present day, down by 26% as of 12:05 p.m. EST, after the corporate supplied an replace concerning its transaction with China Oceanwide. The pair have been making an attempt to merge since 2016 and have run into quite a few delays.
In late November, the businesses had secured an extension for the deal till Dec. 31, however Genworth and Oceanwide have determined to not lengthen the deadline additional on account of “uncertainty across the completion and timing of the remaining steps required to shut the transaction.” Oceanwide famous that it has nonetheless not finalized financing phrases from Hony Capital, and the COVID-19 pandemic and associated restrictions additionally proceed to contribute to uncertainty.
Whereas the merger settlement remains to be in impact, both get together can terminate the settlement at any time. Oceanwide will nonetheless work towards closing the acquisition.
“Once we thought of our most up-to-date extensions of the merger settlement, Genworth’s Board of Administrators believed we have been on a path to a near-term closing based mostly on the data we have been supplied,” Chairman James Riepe mentioned in an announcement. “Given the newest replace, we don’t consider a closing can happen within the close to time period.”
Genworth says it can now flip its consideration towards its contingency plan, which may doubtlessly embrace a partial IPO of its U.S. mortgage insurance coverage enterprise. That might assist it meet $1 billion in short-term debt that is coming due in 2021. The corporate has taken a variety of steps in recent times to enhance its monetary situation, together with promoting its Canadian mortgage enterprise in late 2019.
On the finish of 2020, Genworth had $1 billion in money and liquid belongings. The corporate plans to handle its U.S. life insurance coverage enterprise on a stand-alone foundation, even when the Oceanwide transaction falls by means of. Genworth will host an investor name tomorrow morning to debate the replace.