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Genworth Financial faces another shareholder suit over China Oceanwide deal

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Genworth Financial faces another shareholder suit over China Oceanwide deal

A shareholder complaint has been filed against Genworth Financial Inc. seeking to block the company's planned sale to China Oceanwide Holdings Group Co. Ltd.

The complaint said the proxy statement that Genworth filed in December 2016 asking the shareholders to vote in favor of the merger is "misleading" and "incomplete." The proxy lacks material information about the process leading up to the agreement with China Oceanwide, the complaint states, preventing shareholders from making an informed decision about the merger.

The proxy statement does not disclose if the standstill provisions contained in the confidentiality agreement with other interested parties contain a "fall-away" provision that allows each party to submit a superior proposal to acquire the company. That information would allow shareholders to determine whether other parties who were serious about acquiring Genworth were prevented from submitting superior proposals, the complaint said.

The proxy statement also provided a "materially incomplete" summary of the key financial analyses performed by financial advisers Goldman Sachs & Co. and Lazard Frères & Co. LLC, the complaint said.

The presentations made by Goldman Sachs and Lazard to the the company's board included the specific data and inputs used in analyses, but this information was omitted from the proxy statement in violation of the board's fiduciary duties to shareholders, according to the complaint. The complaint also said Goldman Sachs and Lazard must disclose if they or any of their affiliates held any type of security interest in Genworth, China Oceanwide or any affiliated entities.

It also alleges that the consideration being offered to the company's stockholders for the sale is "unfair and grossly inadequate," given the company's prospects for growth and earnings and its recent financial performance.

The complaint was brought on behalf of Genworth's common stockholders against the company, President and CEO Thomas McInerney and the board, and seeks an order enjoining the transaction from being completed until the information omitted from the proxy statement is disclosed. The plaintiffs are seeking class-action status and a jury trial for the case.