TAL launches takeover bid for Challenger

TAL Daiichi Life Australia, the Australian subsidiary of Japan's Daiichi Life Group, said it has submitted a non-binding indicative proposal to the board of Challenger with a takeover offer.

The offer is for TAL to acquire the remaining 79.5% of ordinary shares it does not already own in Challenger for $11.80 per share via a scheme of arrangement - valuing the deal at around $7.8 billion.

"No binding agreement has been reached. The proposal is non-binding and any transaction would be subject to, amongst other things, satisfactory exclusive due diligence, negotiation and agreement of final terms, and the receipt of all required regulatory approvals," TAL Daiichi Life said.

The Challenger board confirmed it had received the offer and said it was considering it.

"Challenger shareholders do not need to take any action in response to the indicative offer and there is no certainty the proposal will result in a binding offer or that any transaction will eventuate," Challenger said.

"Challenger will continue to keep the market informed in accordance with its continuous disclosure obligations."

The offer coincided with Challenger reporting a strong start to FY27, with total sales rising 52% to $4.4 billion as demand for guaranteed retirement income and fixed-term annuities lifted.

The retirement income provider's asset under management (AUM) increased 5% over the September quarter to $31.9 billion, while net annuity flows reached $1.1 billion, representing annuity book growth of 6.3%.

Annuity sales climbed 72% to $2.8 billion, driven by fixed-term products and offshore reinsurance. Fixed-term sales more than doubled to $2.2 billion, supported by demand for longer-dated annuities and the launch of Challenger's Annuity-Backed Notes (CABN) funding program.

Challenger managing director and chief executive Nick Hamilton said the business had a strong start to the financial year, supported by customer demand, new distribution channels and execution of its growth strategy.

"Sales momentum was strong across both domestic and offshore annuities, supported by demand for guaranteed income solutions in Australia and Japan," Hamilton said.

"Our strategy has seen us expand the channels across which we distribute, enlarging our addressable market and supporting faster growth. Our capital position, unique capabilities and growing demand for yield is shifting our growth trajectory."

Hamilton added the proposed merger of Fidante and Channel Capital was progressing and the transaction is expected to be completed in the first half of the financial year.

"This will create a scaled investment management platform and a more focused Challenger centred on retirement income," he said.

"With APRA's new capital standards for insurers of longevity products coming into effect 1 July 2026, Challenger is not a more resilient and capital-efficient business, capturing the significant opportunity for guaranteed income."