Challenger’s board has turned down Daiichi Life’s offer to buy out Australia’s largest annuities provider, and the share price suggests investors expect a better one.
The board said on Monday, October 26, that the non-binding, A$11.80-per-share proposal from TAL Daiichi Life Australia was “not at a level it could recommend to shareholders”. It said it had assessed the offer against Challenger’s value and prospects. The board intends to engage with TAL to see whether a recommendable proposal can be reached, but said there is no certainty a binding offer or transaction will follow.
Challenger shares closed at A$11.85 on Monday, slightly above the offer price. Bloomberg Intelligence analyst Matt Ingram said Challenger’s sum-of-the-parts value is above the bid, and wrote that a revised offer of A$12.50 to A$13 a share might be more agreeable to the board.
TAL, Daiichi Life’s Australian subsidiary, first disclosed the proposal on October 19. It wants to buy the 79.5% of Challenger it does not already own, through an all-cash scheme of arrangement. The offer values Challenger at about A$7.9 billion, and the remaining stake at about A$6.3 billion (US$4.4 billion). It represented a 17.7% premium to Challenger’s one-month volume-weighted average price of A$10.03.
TAL has been building toward this for 18 months. It bought MS&AD’s 15.1% stake in 2025, then added a further 4.8%. Challenger said it “highly values TDA as its largest shareholder and a commercial partner”.
The bid is part of a wider push abroad by Japan’s insurers, whose domestic market is constrained by a shrinking population. Daiichi Life and Sumitomo Life were among the bidders for HSBC’s Singapore insurance business, which Allianz eventually bought. Sompo Holdings bought Aspen Insurance Holdings for about US$3.5 billion earlier this year.
Established in 1985, Challenger managed about A$128 billion in assets at the end of March.
