TAL Daiichi Life Australia (TDA) has submitted a conditional, non-binding indicative proposal to acquire the remaining 79.5% of Challenger for $8.24 (A$11.80) in cash per share.
The proposed scheme of arrangement (SoA) would lift the equity holding of TDA – a subsidiary of Japanese insurer Daiichi Life Group – from 20.5% to 100%.
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The all-cash price provides a 17.7% premium over the target company’s one-month volume-weighted average price of A$10.03.
Completion of any transaction remains subject to several stipulations.
These include satisfactory due diligence outcomes, the execution of a mutually agreed scheme implementation agreement, regulatory clearances and a formal recommendation from the Challenger board.
Challenger’s directors are currently reviewing the approach and have notified shareholders that no immediate action is required.
The company highlighted that there is no guarantee the indicative bid will result in a binding proposal or agreed transaction, adding that continuous disclosure commitments will guide future market updates.
In its statement, Challenger said that it “will continue to keep the market informed in accordance with its continuous disclosure obligations”.
Established in 1985 and quoted on the Australian Securities Exchange, the retirement income specialist runs an Australian Prudential Regulation Authority-regulated life business serving clients, along with institutional credit origination across private and public markets.
Alongside the acquisition proposal, Challenger released its operational update for the first quarter, reporting a 5% increase in assets under management to A$31.9bn.
The overall portfolio included A$27.7bn in insurance investment assets alongside A$4.2bn of third-party funds, with quarterly portfolio growth partially countered by capital distributions to shareholders.
Overall sales surged 52% during the three-month period to reach A$4.4bn, driven by annuity volumes and appetite for Index Plus lines.
Performance varied by segment, as fixed-term sales climbed 103% to A$2.2bn and offshore reinsurance volumes expanded by 30% to A$320m, whereas lifetime sales contracted 2% to A$314m.
