The Challenger Ltd (ASX: CGF) share price is in focus after revealing a takeover offer and its FY27 first quarter.
Challenger is Australia’s leading retirement income business by providing annuities, helping Aussies convert their nest egg into reliable and sustainable retirement incom.
Takeover offer
The financial company reported that it has received a non-binding and conditional indicative takeover offer from TAL Daiichi Life Australia, a subsidiary of Daiichi Life Group to acquire the remaining 79.5% of Challenger’s shares that it doesn’t already own.
The offer price is $11.80, which is a 20% premium to the last closing Challenger share price. However, it’s a 17.7% premium to Challenger’s one-month volume weighted average price (VWAP) of $10.03.
The financial company said the proposal is subject to a number of conditions including satisfactory completion of due diligence and approval from various regulatory bodies.
Challenger said its board is considering the offer and that shareholders don’t need to take any action. There’s no guarantee that the proposal will lead to a binding offer or that a transaction will eventuate.
FY27 first quarter update
The annuity company revealed that it had a strong start to FY27, with the first quarter showing significant growth.
It reported that for the three months to 30 September 2026, total sales were up 52% to $4.4 billion. Fixed term sales increased 103% to $2.2 billion and offshore reinsurance sales jumped 30% to $320 million, though lifetime sales declined 2% to $314 million.
Challenger assets under management (AUM) grew by 5% for the quarter to $31.9 billion.
It attributed the growth to growing customer demand, new distribution channels and execution of its growth strategy. There was growth across both domestic and offshore annuities.
In July, it launched a $6 billion Challenger annuity-backed notes (CABN) program to create a new channel to support annuity book growth and diversify its funding sources. It said there was strong investor demand for the first issuance of a A$750 million wholesale three-year note that highlighted the attractiveness of the solution and provides the opportunity to expand future issuances across a range of tenors (time periods).
Challenger said that the RBA’s recent approval of a repurchase agreement eligibility further enhances the attractiveness of the CABN.
The company noted that the merger between Fidante and Channel Capital remains on track for completion later this half, subject to regulatory approval and separation activities. After the transaction has completed, Challenger will own 45% of the merged entity.
Fidante FUM was $85 billion, a decrease of 5% for the quarter and included net outflows of $3.3 billion, client distributions of $0.7 billion and negative market movements of $0.5 billion.
Final thoughts on the Challenger share price
Challenger is an impressive operator. I’m not sure if the takeover offer is high enough to get it across the line.
If I were a shareholder, I’d hold on to see if there’s an increase to the takeover offer. Plus, the FY27 first quarter update was strong.
I wouldn’t buy new Challenger shares today, I’d look at other ASX dividend shares that could be opportunities.
