Robbins LLP: Acquisition of Genworth Financial, Inc. (GNW) by China Oceanwide Holdings Group Co., Ltd. May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Genworth Financial, Inc. (NYSE: GNW) by China Oceanwide Holdings Group Co., Ltd. On October 23, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which China Oceanwide will acquire Genworth Financial. Under the terms of the agreement, Genworth Financial shareholders will receive $5.43 for in cash each share of Genworth Financial common stock.
Is the Proposed Acquisition Best for Genworth Financial and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Genworth Financial is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $5.43 merger consideration represents a premium of only 4.2% based on Genworth Financial’s closing price on October 22, 2016. This premium is significantly below the average one day premium of nearly 46.27% for comparable transactions within the past three years. In the last three years, Genworth Financial traded as high as $18.74 on May 13, 2014, and most recently traded above the merger consideration – at $5.44 – on August 11, 2015.
On August 2, 2016, Genworth Financial reported earnings results for its second quarter 2016. Net operating income for the second quarter of 2016 was $123 million, or $0.25 per diluted share, compared with net operating income of $119 million, or $0.24 per diluted share, in the second quarter of 2015, a 3.4% increase. During the second quarter of 2016, Genworth Financial completed the sale of its European Mortgage Insurance (“MI”) business to AmTrust Financial Services, Inc., which resulted in net proceeds of approximately $50 million to the U.S. MI business. Genworth Financial beat consensus analyst estimates for Adjusted Net Income in three out of the last four quarters. In commenting on these results, Genworth Financial President and Chief Executive Officer Tom McInerney remarked, “Our results in the second quarter were solid, and we were especially pleased with the strong performance in U.S. MI. We also achieved our cash expense reduction target and remain on track to complete the repatriation of our Bermuda subsidiary in the fourth quarter.”
In light of these facts, Robbins LLP is examining Genworth Financial’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Genworth Financial shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Genworth Financial shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.