Australia's Challenger lowers takeover offer for Pepper Money, values it at $714 million (updated)

Challenger

16/03/2026 23:06

Challenger lowers offer price to A$2.25 per share

Revised offer price at 6.6% premium to Pepper's last close

Challenger says it is its best and final offer

Adds analyst quote in para 3,4&7; share moves in 10-11

By Rajasik Mukherjee

March 17 (Reuters) - Shares of Australia's Pepper Money PPM.AX fell more than 10% on Tuesday after investment manager Challenger CGF.AX lowered its takeover offer for the non-banking lender, valuing it at A$1.01 billion ($713.7 million), down from an earlier valuation of A$1.16 billion.

Pepper Money said its suitor had reduced its offer due to the ongoing deterioration in both market conditions and the operating environment.

"Challenger's revised rationale is justified - but that just makes the original bid look worse," said Mark Gardner, founder and CEO of MPC markets.

"You don't get credit for fixing a mistake you shouldn't have made."

Under the terms of the proposed deal, Pepper Money shareholders would get A$2.25 per share, down from its February offer of A$2.60 per share.

The revised offer is at a 6.6% premium to Pepper Money's last close on March 16.

"The underlying business hasn't changed - what's changed is that Challenger's investors made clear they weren't comfortable with the original premium, and that's now being worn by PPM shareholders," Gardner said.

Pepper Money shares fell as much as 11.4% to A$1.870, heading for what could be their worst day since August 23, 2023.

Challenger shares gained nearly 5%, eyeing their best day since February 18.

Pepper Money said Tuesday's revised proposal was Challenger's best and final offer, in the absence of a superior proposal.

The company added that the reduced offer includes the calendar year final dividend of 7.8 Australian cents along with any special dividend.

        If the offer goes through, Pepper Money would leave the stock exchange for the second time in its history.

        Founded in 2000, the firm was first listed on the Australian stock exchange in 2015 before KKR took it private in 2017. Pepper Money was then relisted in 2021 in Australia's biggest initial public offering of the year.

Pepper Group ANZ HoldCo, Pepper Money's top shareholder with about a 60% stake, is a unit of Pepper Global Topco, which is in turn owned by U.S. private equity firm KKR KKR.N.

($1 = 1.4152 Australian dollars)

 (Reporting by Rajasik Mukherjee; Editing by Shailesh Kuber and Stephen Coates)

 ((Rajasik.Mukherjee@thomsonreuters.com;))