Daiichi Life offers $4.4 billion to buy rest of Challenger

Daiichi Life Group offered to buy the rest of Challenger in a bid that valued the Australian firm at around 7.9 billion Australian dollars ($5.5 billion), the latest move by a Japanese insurer to expand abroad.

Challenger received an indicative offer from TAL Daiichi Life Australia, a unit of Daiichi Life, to acquire the remaining 79.5% of Challenger shares at AU$11.80 per share, according to a statement Monday. That’s about 20% higher than Friday’s closing price and values the Daiichi Life offer for what it doesn’t own already at about AU$6.3 billion.

A deal would give Daiichi Life control of Australia’s largest provider of annuities in the nation’s fast-growing retirement market. Japanese insurers are making acquisitions overseas as a shrinking population constrains growth prospects at home.

Established in 1985, Challenger is a Sydney-listed investment management company with around AU$128 billion in assets, providing its customers with financial security for their retirement, according to its website.

Shares of Challenger jumped as much as 18% in Sydney trading on Monday. Daiichi Life was up about 1% in Tokyo.

A deal would be one of the largest for Daiichi Life, whose biggest takeover to date is its $5.5 billion acquisition of U.S. insurer Protective Life in 2015. The Japanese insurer, which has business spanning Asia-Pacific and North America, has earmarked ¥1.5 trillion ($9.5 billion) for strategic investments through March 2031, according to a presentation in July.

Daiichi Life began investing in Challenger last year. The Tokyo-based firm confirmed it has submitted a nonbinding proposal to acquire more shares in Challenger but said no decision has been made on a transaction. It didn’t provide further details.

Challenger’s board is currently considering the offer, and there is no certainty the proposal will result in a binding offer or that any transaction will eventuate, according to its statement.