Pepper Money shares surge after Challenger-led $1.16 billion takeover approach

SYDNEY, Feb 9, 2026, 19:18 AEDT

• Pepper Money got a non-binding $2.60 per share takeover approach, this one led by Challenger.
• The board has given the green light for exclusivity on due diligence, with discussions still underway.
• Challenger has no intention to boost its stake past 25%, and it’s ruling out an equity raise.

Pepper Money disclosed it’s received a confidential, non-binding, and conditional buyout approach from Challenger and top shareholder Pepper Group, aiming to acquire all of the non-bank lender through a scheme of arrangement. The proposal values Pepper Money at $2.60 a share in cash, with the figure set to be adjusted for the company’s final 2025 dividend and any special payout. 1

Pepper Money’s takeover approach lands the company with a A$1.16 billion ($814.9 million) valuation, according to Reuters, marking a hefty 47.7% premium over its last closing price. That sent shares surging, with a record intraday leap north of 33%. “Puts the business back where its origination model is better suited, in private hands,” said Mark Gardner, MPC Markets’ founder and CEO. Gardner described the jump in Challenger shares as “a classic acquirer reaction.” 2

Challenger confirmed it’s been discussing a possible joint bid for Pepper Money alongside Pepper Group, adding it wouldn’t take more than a 25% stake if the deal moves forward. The company said there’s “no intention to raise common equity” for any such transaction, stressing it will only go ahead if the investment is a strategic fit and boosts earnings per share. 3

Pulling off a scheme of arrangement—the typical route for takeovers in Australia—means Pepper Money needs its shareholders to sign off, plus a green light from the court, ahead of any delisting move.

Pepper Money’s board has set up an independent committee to review the approach, giving Challenger exclusive rights to conduct confirmatory due diligence and draft transaction documents. Still, the company warned there’s no guarantee of a firm proposal ahead, or that discussions will actually result in a deal.

Challenger dropped as much as 7.5% at one point in the session; Pepper Money, meanwhile, surged. Investors delivered the kind of split-screen move usually reserved for deal makers and their targets. As for the broader ASX benchmark, it was last seen up roughly 1.9%.

The deal, if it goes through, would see Pepper Money leave the ASX yet again, Reuters said. The company first listed in 2015, went private under KKR in 2017, and found its way back to the market with a 2021 relisting.

Pepper Group announced back in 2017 that it struck a deal to be bought out by a KKR affiliate, a move that would take the company private if the acquisition closed. 4

If it happens, a take-private could mark just the latest shift in Australia’s consumer and non-bank lending sector, where buyers keep circling for loan portfolios and recurring fees. Reuters flagged an earlier non-binding offer revealed by Humm Group, as well as Block picking up Afterpay, the buy-now-pay-later player, back in 2022.

Here’s the catch: the offer’s just indicative for now. Due diligence might shake up the terms, funding conditions could shift quickly, and a scheme needs a string of approvals—each one a potential snag or a trigger for a price reset.