Pepper Money has called time on months of takeover discussions with Challenger after its board ruled a reduced “best and final” offer could not be taken forward.
Pepper Money, the non‑bank lender listed on the ASX, confirmed it had ended negotiations with investment manager Challenger and Pepper Group ANZ HoldCo Limited over a proposed acquisition, deciding instead to back its current growth trajectory.
In a statement to the ASX on Wednesday (25 March), Pepper Money said its Independent Board Committee (IBC) had completed its review of Challenger’s revised, confidential, and non‑binding proposal to acquire the lender via a joint vehicle with Pepper Group.
The company reminded investors that on 17 March, it had disclosed receipt of an updated indicative proposal from Challenger at a price of $2.25 per share, down from $2.60, which Challenger had described as its “best and final offer” in the absence of any superior bid.
Pepper said the IBC, having weighed the proposal and consulted with shareholders, ultimately found that the revised approach could not be taken to a binding deal.
The lender said the IBC “has determined that the revised proposal is not reasonably capable of execution” and that it had therefore decided not to proceed, bringing all discussions with Challenger in relation to the proposal to an end.
Challenger confirms rejection
Challenger issued its own statement on Wednesday (25 March) acknowledging that Pepper’s board had drawn a line under the proposal.
The group said it had been advised by Pepper Money’s IBC that the joint, revised proposal from Challenger and Pepper Group ANZ HoldCo Limited was “not reasonably capable of execution.”
In the same statement, Challenger’s managing director and CEO, Nick Hamilton, thanked Pepper for its co-operation and stressed that the two businesses intended to maintain their existing commercial ties.
“I would like to thank the Pepper Money management team for their engagement throughout the process, and we look forward to continuing our commercial relationship,” Hamilton said.
How the bid evolved
The decision to walk away caps a six‑week process that began when Pepper first told the market in early February that it was the subject of a takeover approach from Challenger, in partnership with Pepper Group.
Challenger, one of Australia’s largest providers of annuities, had made an initial, non‑binding proposal to acquire Pepper Money through a jointly owned entity with Pepper Group ANZ HoldCo Limited.
The parties envisaged implementing the transaction via a scheme of arrangement under which Challenger would ultimately hold no more than 25 per cent of Pepper Money’s issued capital.
Under the proposal, Pepper Money shareholders – other than Pepper Group – were offered cash consideration of $2.60 per share (less the final dividend in respect of 2025 and any special dividend declared).
To assess the approach, Pepper’s board established an Independent Board Committee and granted Challenger a period of exclusivity to undertake confirmatory due diligence and work up binding documentation.
Challenger told the market in February that acquiring an interest in Pepper would support its strategy by providing strategic, long‑term rights to access fixed‑income assets originated by the non‑bank.
However, when Challenger returned to the market on 17 March with its revised proposal, it did so with a lower headline price than originally floated.
That update revealed that Challenger had submitted a revised offer alongside Pepper Group, cutting the proposed consideration from $2.60 to $2.25 per share.
Challenger said at the time that the revised price represented its “best and final offer.”
Pepper leans into growth and capital returns
Pepper used its statement to the market to underline the “momentum” it was seeing across its lending businesses.
The lender pointed to its financial year 2025 results, noting that the business was “well positioned” and “continues to capitalise on growth opportunities”.
It highlighted that, as at the end of February 2026, application flows were continuing to track higher in both mortgages and asset finance.
Pepper said applications over the first two months of the year were “exceeding” the same period in 2025 by 21 per cent, while originations were running 34 per cent ahead of the prior corresponding period.
“Pepper Money continues to execute on its capital management initiatives, the company will continue to access ongoing opportunities to return excess capital to shareholders,” the company said.
[Related: Prime lending and brokers drive record Pepper Money year]
