(Yicai Global) April 9 -- Chinese investment firm Oceanwide Holdings has terminated a USD2.7 billion agreement to buy US insurer Genworth Financial that was inked four years ago. It gave no reason.

Asia Pacific Global Capital, a quarter owned by Oceanwide, signed the acquisition deal in October 2016. It was approved by the boards of both companies at the time and was expected to be completed in mid-2017.

Under the agreement, Beijing-based Oceanwide also pledged to inject USD600 million into Genworth to pay off its debt due in 2018, as well as USD525 million in cash into its US life insurance businesses.

Oceanwide considered the acquisition an important step in pushing forward its internationalization, which would help the company greatly expand its asset scale, improve its asset structure, and increase profitability.

Its parent company, Beijing-based China Oceanwide Holdings Group, was founded in 1989 by Lu Zhiqiang, who is also the conglomerate’s chairman and president.

According to an announcement on Genworth’s website on April 6, its directors had concluded that Oceanwide would be unable to close the deal within a reasonable time frame and that greater clarity about Genworth’s future was needed for the firm to execute its plans to maximize shareholder value.

The board decided to terminate the Oceanwide merger agreement, James Riepe, non-executive chairman of Genworth, said in the statement.

Shared Vision

“While we believe it is necessary and appropriate at this stage to terminate the transaction, Genworth continues to share Chairman Lu’s vision of bringing long-term care solutions to the aging population in China,” said Tom McInerney, Genworth president and chief executive.

“Both parties believe there are significant, compelling opportunities to address critical societal needs outside of the US,” McInerney added.

China Oceanwide’s businesses include financial services, real estate, infrastructure, technology and information services, electricity, and strategic investments. It controls and has invested in many listed companies such as Oceanwide Holdings, China Minsheng Bank, and Legend Holdings.

But the group has cash flow problems. Units Minsheng Wealth and Minsheng Trust have failed to redeem some private equity funds and trust wealth management products on schedule.

The group and its affiliated companies have been slapped with individual lawsuits due to overdue financing repayments, and the company is speeding up the introduction of strategic investors, Lu said in March.

Oceanwide’s shares [SHE: 000046] traded in a narrow range today, ending near yesterday’s closing price of CNY2.79 (43 US cents). Genworth [NYSE: GNW] closed up 2.4 percent yesterday at USD3.46, giving it a market value to USD1.753 billion.

Editor: Peter Thomas