Challenger rejects Daiichi Life’s $4.4 billion takeover offer

Challenger’s board has rejected a $4.4 billion takeover offer from Daiichi Life Group, saying it intends to engage with the Japanese insurer’s Australian unit to see whether a proposal can be reached that the board can recommend.

Challenger said there’s no certainty that a binding offer or transaction will materialize, after an indicative bid from TAL Daiichi Life Australia wasn’t at a level it could recommend to shareholders, according to a statement Monday.

Daiichi Life’s Australian unit last week offered to buy the remaining 79.5% of Challenger at 11.80 Australian dollars per share, valuing the financial firm at about AU$7.9 billion ($5.5 billion).

Bloomberg Intelligence analyst Matt Ingram said Challenger’s sum-of-the-parts is above the bid. “A revised offer of A$12.50-A$13 per share might be more agreeable” to the board, he wrote Monday.

Shares of Challenger and Daiichi Life were little changed on Monday.

Japanese insurers have been making acquisitions overseas as a shrinking population constrains growth at home. Daiichi Life and Sumitomo Life Insurance were among bidders for the Singaporean insurance unit of HSBC Holdings, though Allianz eventually emerged as the buyer. Sompo Holdings bought Aspen Insurance Holdings for about $3.5 billion earlier this year.

Established in 1985, Challenger managed about AU$128 billion in assets as of the end of March, according to its website. The company is Australia’s largest provider of annuities in the nation’s retirement market.