Genworth Financial, Directors Sued Over Merger

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A shareholder class action has been filed against insurance holding company Genworth Financial, its board of directors and Asia Pacific Global Capital Co., Ltd. claiming the former’s fiduciaries breached their duties by entering into a merger agreement that was “woefully inadequate in light of Genworth’s true value and its growth prospects.” According to the 17-page complaint, shareholders primarily allege that Genworth’s board of directors breached their fiduciary responsibilities by agreeing to a merger with Asia Pacific that included “protection devices that preclude other bidders from making a successful competing offer for the company.”

Genworth entered into an agreement on October 23, 2016 in which Asia Pacific would buy its common stock and commit more than $1 billion in cash to the company’s life insurance businesses nationwide. Stockholders allege preclusive provisions within the merger agreement in Asia Pacific’s favor, including a no-solicitation clause, “information rights” dibs allowing Asia Pacific to review any rival bids first, and a “matching rights” clause, prevent third parties from making potentially superior proposals for Genworth Financial and impede the board’s ability to act with diligence in investigating better offers for the company.