It has been 3.8 years since China Oceanwide’s USD 2.7bn offer to acquire Genworth Financial [NYSE:GNW] became a binding transaction. The market is pricing in a close to zero chance that the long running attempt will complete. But the bidder is, perhaps somewhat gamely, pressing ahead with its efforts to obtain financing for the deal.
China Oceanwide is working to fix its financing for the proposed deal and, as part of that effort, has recently held fresh talks with potential debt providers other than Hony, a source familiar with the situation, but who is not directly involved in the financing, recently told the Flash.,
As an event-driven opportunity, the Flash recognizes that the Genworth/China Oceanwide deal is tantalizing. Shares in Genworth closed 2.44% higher at USD 2.1 on 4 August, providing a whopping 158% spread to the USD 5.43 per share recommended offer price. Robert Sassoon of AlphaSituations who publishes on Smartkarma believes Genworth is trading well below its fair value floor "of above USD 3", based on a SOTP analysis, which it believes “very much errs on the side of conservatism”.
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by George Shen and Vivian Wong