Brookfield Business Partners LP agreed to acquire 48,944,645 common shares of Genworth MI Canada Inc. from Genworth Financial Inc. for approximately C$2.4 billion, or C$48.86 per share.
The shares being acquired represent an approximately 57% controlling interest in the business. Genworth Financial International Holdings LLC and Genworth Mortgage Insurance Corp. will sell all of their common shares in Genworth Canada. The former holds 34,799,545 common shares, and the latter owns 14,145,100 common shares.
Genworth Financial is selling its stake in Genworth MI Canada to increase the likelihood of subsequently completing its own deal with China Oceanwide Holdings Group Co. Ltd. and its affiliates. Oceanwide has approved the Canadian transaction.
Also, Genworth Financial and China Oceanwide extended the deadline for their transaction to close to Dec. 31 from Nov. 30. Once all other regulatory processes are complete, the Oceanwide transaction will still require clearance in China for currency conversion.
Genworth also believes that the sale of its stake in Genworth MI Canada will increase its financial flexibility, irrespective of the Oceanwide transaction.
The closing of the transaction for the Genworth MI Canada shares is subject to customary approvals, including the approval of the Canadian finance minister. It is expected to occur by the end of the year.
The shares are being acquired for investment purposes, according to a statement. Brookfield Business Partners may acquire additional shares or securities convertible into shares, dispose of such securities, or continue to hold the securities of Genworth Canada.
Upon the closing of the transaction, Genworth Financial's nominees, other than the CEO of Genworth MI Canada, on the board of directors of Genworth MI Canada and its wholly owned subsidiaries will resign from such positions. The vacancies will be filled with nominees of Brookfield Business Partners.
Brookfield Business Partners intends to fund approximately US$700 million of the purchase on closing and for certain of its institutional partners to co-invest alongside it for the balance. It has also agreed, until the closing of the transaction, to provide Genworth Financial with a bridge loan of up to US$850 million.
The transaction, including the bridge loan, will be funded from existing liquidity.
BFIN Securities LP, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and Scotiabank acted as financial advisers and Torys LLP as legal advisers, to Brookfield Business Partners.
Goldman Sachs & Co. LLC and Lazard Frères & Co. LLC are acting as financial advisers to Genworth. Osler Hoskin & Harcourt LLP and Sullivan & Cromwell LLP are serving as legal advisers to Genworth, and Richards Layton & Finger is acting as legal adviser to the Genworth board of directors.