Daiichi Life Group has offered to buy the rest of Challenger in a bid that values the Australian firm at around A$7.9bn, the latest move by a Japanese insurer to expand abroad.
Challenger received an indicative offer from TAL Daiichi Life Australia, a unit of Daiichi Life, to acquire the remaining 79.5% of Challenger shares at A$11.80 per share. That is about 20% higher than Friday’s closing price and values the offer for what Daiichi Life does not already own at about A$6.3bn.
A deal would give Daiichi Life control of Australia’s largest provider of annuities in the nation’s fast-growing retirement market. Japanese insurers are making acquisitions overseas as a shrinking population constrains growth prospects at home.
Established in 1985, Challenger is a Sydney-listed investment management company with around A$128bn in assets, providing customers with financial security for their retirement. Shares of Challenger jumped as much as 18% in Sydney trading on Monday, while Daiichi Life was up about 1% in Tokyo.
A deal would be one of the largest for Daiichi Life, whose biggest takeover to date is its $5.5bn acquisition of US insurer Protective Life in 2015. The Japanese insurer, which has business spanning Asia-Pacific and North America, has earmarked ¥1.5tn ($9.5bn) for strategic investments through March 2031.
Daiichi Life began investing in Challenger last year. The Tokyo-based firm confirmed it has submitted a nonbinding proposal to acquire more shares in Challenger, but said no decision has been made on a transaction, and did not provide further details. Challenger’s board is currently considering the offer, and there is no certainty the proposal will result in a binding offer or that any transaction will eventuate.
