Genworth Cancels $2.7B Oceanwide Buyout Deal

Genworth Financial said that it has terminated the buyout deal worth $2.7 billion with investment firm China Oceanwide Holdings Group. Shares of the U.S. insurer were down 1.1% in Wednesday’s pre-market trading.

Genworth (GNW) initially proposed the deal in Oct. 2016, but Reuters learned that the merger got delayed over concerns related to China getting access to U.S. citizen’s sensitive data.

Meanwhile, Genworth’s board said that it is terminating the transaction as “Oceanwide will be unable to close the proposed transaction within a reasonable time frame and that greater clarity about Genworth’s future is needed now in order for the Company to execute its plans to maximize shareholder value.” 

Nevertheless, the companies said that they will continue to bring long-term care insurance products to China’s insurance market. Genworth said that it will pursue a potential partial IPO of its U.S. mortgage insurance business under its revised strategic plan. (See Genworth Financial stock analysis on TipRanks)

BTIG analyst Mark Palmer maintained a Hold rating on the stock, as the analyst believes that investors should remain on the sidelines. Palmer previously said that he sees “plenty of risk in the months ahead” related to the Oceanwide deal.

Palmer raised the stock’s price target to $3.50 (0.28% downside potential) from $3.00 on March 25. Meanwhile, shares have gained by about 5.4% in one year.

On TipRanks’ Smart Score ranking, Genworth gets a 5 out of 10 suggesting that the stock is likely to perform in-line with market expectations.

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