Dai-ichi Life's Australian arm makes non-binding A$11.80-a-share proposal for annuity provider Challenger

Australian annuity provider Challenger said on 19 October that it has received an indicative, non-binding proposal from TAL Daiichi Life Australia, part of Japan's Dai-ichi Life Group, insuranceNEWS.com.au reported. TAL already holds 20.5% of Challenger and proposes to buy the remaining 79.5% through a scheme of arrangement at A$11.80 a share.

The price is a 17.7% premium to Challenger's one-month volume-weighted average share price of A$10.03 and values the company at about A$7.94bn. The proposal depends on due diligence, a scheme implementation agreement on acceptable terms, regulatory approvals and a recommendation from the board.

Challenger said its board is considering the proposal and that "there is no certainty" it will lead to a binding offer. Shareholders do not need to act now, and the company will update the market under its continuous disclosure obligations.

Challenger shares rose as high as A$11.65 during the day, 18% above Friday's close of A$9.85. Over the previous 12 months the shares had risen about 10%, while the S&P/ASX 200 index fell about 2%, The Motley Fool reported. In a separate trading update, chief executive Nick Hamilton said sales were strong in both domestic and offshore annuities, supported by demand for guaranteed income in Australia and Japan.