Investment giant Challenger (ASX:CGF) confirmed it is in advanced discussions to acquire Pepper Money (ASX:PPM).
The proposed deal is structured as a joint venture with Pepper Group ANZ, aiming to acquire 100% of Pepper Money’s shares via a scheme of arrangement.
Under the indicative non-binding proposal, Pepper Money shareholders—excluding Pepper group—are offered a cash consideration of $2.60 per share, though this figure will be adjusted downward for any final 2025 dividends or special payouts.
For Challenger, the acquisition is a strategic play to gain "long-term rights to access fixed income assets," which are critical for driving growth and managing its investment returns.
The company emphasised its role as a disciplined capital allocator, noting that it has no plans to raise common equity to fund the deal.
If the transaction proceeds, Challenger expects to hold a stake of no more than 25% in the total shares of Pepper Money.
Pepper Money has responded by establishing an Independent Board Committee to evaluate the offer.
While the IBC has granted Challenger exclusivity to conduct confirmatory due diligence, both parties cautioned that discussions remain incomplete.
There is currently no certainty that these "advanced" talks will lead to a definitive agreement or a binding offer.