A U.S. national security panel has approved the buyout of Genworth Financial Inc by China Oceanwide Holdings Group Co for $2.7 billion. In a statement issued by Genworth, the Committee on Foreign Investment in the U.S, which is tasked with reviewing all acquisition of U.S companies by other foreign entities, had ruled that there were no unresolved issues as far as the transaction is concerned.
Approval of the deal
The acquisition of Genworth was first announced in October 2016 before shareholders of Genworth approved it in March 2017. Since being approved by both companies, the deal was waiting regulatory reviews by the state and federal government. The deal however still has some hurdles ahead as it will have to secure regulatory approvals from China, as well as a number of states in the U.S. This is after the two companies introduced changes in the capital structure of the original deal last month.
Handling policyholders’ personal data
One of the requirements that Genworth had to get before being approved by the federal government is an assurance on how to manage and handle data of its policyholders in the U.S. Genworth announced that it will use a third-party service provider based in the U.S to protect and manage data belonging to U.S policyholders.
According to Tom McInerney, the Chief Executive Officer of Genworth, the deal was the best option for the company after it went through a series of losses on its long-term-care policy, which takes care of home-health aides or nursing-home stays.
On his part, Lu Zhiqiang, the Chairman of China Oceanwide, said that the conclusion of the CFIUS process is a significant step in the company’s efforts to close the deal. McInerney said that the deal is expected to put Genworth in a much better financial position, as well as allow it extend its insurance expertise to China.
The U.S trade tariffs
This deal comes in midst of an ongoing stalemate caused by President Donald Trump’s threats to impose tariffs on some of the commodities that are imported from China. On the other hand, China has also threatened to retaliate by imposing tariffs on all goods imported from the U.S. Since taking office in 2017, Trump has stopped two foreign deals that involved Chinese companies. These are Lattice Semiconductor’s sale to a Chinese-backed firm and Broadcom Ltd acquisition of Qualcomm.