Australia's Challenger rises as Citi says Daiichi unit likely to sweeten takeover bid
** Shares of Australia's Challenger CGF.AX rise as much as 0.7% to A$11.830, hitting their highest level since August 14, 2018
** Citi retains its "buy" rating on CGF and raises its target price to A$13.20
** Brokerage says Daiichi Life's proposed A$11.80 per share scheme offer is unlikely to secure board support at the current level and expects negotiations for a higher price
** Daiichi's takeover offer values the investment manager at A$7.94 billion ($5.54 billion)
** Citi adds recent financial services M&A transactions have carried an average premium of around 40% to one-month VWAP, compared with Daiichi's current offer premium
** "Offer surely has to rise, but deal prospects seem strong" — Citi
** Says Challenger's FY27 core basic EPS guidance of 45 - 49 Australian cents per share remains unchanged and raises its core EPS forecasts by 1% for FY27E and 0.3% for FY28E and FY29E
** Jefferies says "17.7% control premium looks light compared with historical premiums paid by Japanese insurers"
** "In short, we expect negotiations to result in a higher bid" — Jefferies
** Stock up over 25% YTD, including session's moves
($1 = 1.4327 Australian dollars)