Please ensure Javascript is enabled for purposes of website accessibility

Here’s Why Genworth Financial Stock Is Soaring Today

By Matthew Frankel, CFP® - Updated Mar 3, 2020 at 12:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A long-awaited windfall just got a step closer for shareholders

What happened

On a turbulent day for the stock market, insurer Genworth Financial (GNW 3.16%) is among the biggest winners. As of noon EST, the insurer's shares are about 13% higher on the day.

The reason is that the long-awaited acquisition of Genworth looks like it may actually happen. Without getting too deep into the details, Genworth and proposed acquirer China Oceanwide Holdings have reached an agreement in principle with the New York State Department of Financial Services, which is one of the few remaining roadblocks for the acquisition.

Man with fist raised in the air in celebration.

Image source: Getty Images.

So what

To be clear, shareholders have been waiting for a long time for the acquisition of Genworth to go through.

It was originally announced in October 2016, so it's been more than three years of uncertainty for shareholders. The deadline to get regulatory approval for the deal was extended several times, and at some points it seemed highly unlikely that it would happen.

Now that the latest hurdles have been overcome, the deal still needs the approvals of other regulators in both the U.S. and China. But management seems optimistic and is targeting a closing date of March 31.

Now what

Take this news with a grain of salt. As mentioned, the deal has been delayed many times, and it's not inconceivable for the companies to encounter more resistance.

But patient investors could be handsomely rewarded if the deal finally goes through. Even after today's gain, the proposed acquisition price represents a 15% premium over Genworth's share price. On the other hand, if the deal falls through or continues to be delayed, Genworth could easily give up all of today's gain and more.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Genworth Financial, Inc. Stock Quote
Genworth Financial, Inc.
GNW
$3.59 (3.16%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.