Australia's leading annuity provider is considering a $7.9 billion tentative takeover offer from the country's biggest life insurance company.
Challenger Limited said on Monday that TAL Dai-ichi Life Australia had floated a figure of $11.80 per share for the 79.5 per cent of Challenger it didn't already own.
The figure is a 17.7 per cent premium to Challenger's average price over the past month, the company said.
Challenger shares had jumped 16.7 per cent to an eight-year high of $11.49 in Monday morning trading.
Sydney-headquartered TAL is a wholly owned subsidiary of Dai-ichi Life Holdings, Japan's second-largest insurance company.
TAL's roots date to Government Life, a business created by New Zealand's government back in 1869.
It became Tower Corp in 1987 and spun off its Australian operations in 2006, which were acquired by Dai-ichi in 2011 and rebranded as TAL.
Today the company is the biggest life insurer in Australia with over one-third of the market, having purchased Westpac's life insurance business in 2022.
Challenger's board is considering TAL's indicative offer, which is subject to a number of conditions, including due diligence.
Founded in 1985, Challenger manages nearly $32 billion in assets.
It sold $4.4 billion in annuities in the September quarter, up 52 per cent from a year ago.
"We have started the year strongly, with continued momentum across our retirement business driven by growing customer demand, new distribution channels, and execution of our growth strategy," said managing director and chief executive Nick Hamilton in a statement.
The company expects its proposed merger of its investment management business Fidante with privately held Channel Capital to close before the end of the year.
