The Challenger Ltd (ASX: CGF) share price is up 3% after revealing it’s cutting the bid for Pepper Money Ltd (ASX: PPM).
Challenger is the leading provider of annuities in Australia, which means turning a lump sum into ongoing income.
Takeover bid for Pepper Money reduced
Challenger had previously made a bid for non-bank lender Pepper Money. at $2.60 per share.
A lot has happened since that bid was announced in February 2026, including the Iran conflict, a much higher oil price and the prospect of rising interest rates.
Challenger said in an ASX statement that further to its update on 9 February 2026, it (along with its co-bidder Pepper Group ANZ HoldCo Limited) has submitted a revised confidential, non-binding and conditional proposal to jointly acquire Pepper Money Limited (the ASX-listed business).
Under this revised proposal, Challenger is reducing its offer from $2.60 per share to $2.25 per share, less the final fully franked Pepper Money 2025 dividend of $0.078 per Pepper Money share and any special dividend.
The revised offer represents Challenger’s best and final offer in the absence of a superior proposal.
Challenger said that discussions remain “incomplete and there is no certainty that the revised proposal will eventuate in a transaction.”
The company also said that it will continue to keep the market informed in keeping with its continuous disclosure obligations.
Why was the takeover bid reduced?
Pepper Money noted that the deterioration in both market conditions and the operating environment meant Challenger decided to submit a reduced offer.
Will the offer be accepted?
In response to the first offer, Pepper Money’s board established an independent board committee (IBC) to assess that offer.
The independent board committee decided to grant Challenger exclusivity to undertake confirmation due diligence and progress transaction documentation in order to present a more certain proposal, which has come back lower.
If I were a shareholder, I’d be less inclined to accept the lower offer – the Pepper Money share price was higher than $2.25 just a few months ago. I also understand why Challenger decided to lower the bid. Sometimes a big news event can put the spanner in the works of a takeover.
At this stage, there are other ASX dividend shares I’d rather buy at the current Challenger share price and Pepper Money share price
