The planned acquisition of US-based insurer Genworth Financial by China Oceanwide is facing a regulatory obstacle that could likely delay the deal’s completion beyond its original target date.
In October last year, Genworth announced that it would be acquired by China Oceanwide for around US$2.7 billion. In March, Genworth’s shareholders approved the sale, but the deal has to clear several regulatory agencies in both the US and China.
On Thursday, both companies announced that they had refiled their joint notice with the Committee on Foreign Investment in the United States (CFIUS), an American government committee that oversees foreign entities taking control of US-based companies. This is the second time the companies have refiled their CFIUS notice, in order to give the committee more time to review the proposed deal. The first time was in April.
This gives the CFIUS an additional 30 days to conduct a review, which may be followed by a 45-day investigation period.
Genworth told the Richmond Times-Dispatch that it will “continue to actively engage in discussions with CFIUS; however, there can be no assurances that CFIUS will ultimately agree to clear the transaction.”
The companies initially targeted closing the deal by mid-2017, but that seems unlikely as of now. They are currently working to extend the deadline of August 31 set in the merger agreement.
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