Pepper Money (ASX:PPM) has surged 25% in morning trade after confirming it has received a confidential, non-binding and conditional proposal from Challenger Ltd (ASX:CGF) to acquire 100% of the lender via a scheme of arrangement at $2.60 per share.
At midday, shares had come back slightly to be up 23.3% on the day to $2.17.
Pepper Money said the approach follows recent media speculation and would see Challenger and Pepper Group ANZ HoldCo jointly acquire the company, with Pepper Group initially taking an interest in the acquiring entity at least equal to its current stake in Pepper Money.
Under the indicative proposal, shareholders other than Pepper Group would receive cash consideration of $2.60 per share, less the final FY2025 dividend and any special dividend paid or declared.
Pepper Money said its board has formed an Independent Board Committee to assess the proposal and has granted Challenger exclusivity to conduct confirmatory due diligence and progress transaction documentation.
“Discussions are ongoing,” the company said, adding there is no certainty a binding deal will be reached.
Pepper Money is being advised by Jefferies Australia and Reunion Capital Partners, with Gilbert + Tobin acting as legal adviser.