Non-bank lender Pepper agrees to acquisition by KKR entity

Non-bank lender Pepper Money has entered into a deal with an entity of global investment firm KKR that will see the latter acquire 100 percent of its shares worth $675.9 million.

In an ASX announcement, the lender laid out details of the acquisition.

The scheme will go to a shareholder vote and, if approved, will see Red Hot Australia Bidco Pty Ltd – an entity owned by KKR – buy the shares. 

Shareholders will be given the option of rolling their shares over to Bidco or selling them at $3.60 per share.

The journey towards the takeover bid started in 2016 when Pepper’s stock prices were not where the firm wanted them to be, the Australian Broker reported, citing Pepper CEO Mike Culhane.

“The market thought that they were pretty cheap so we had a number of inbound enquiries from private equity firms, Chinese corporates, etc. All manner of firms were interested in starting a conversation about taking a position or the sorts of transactions which could be done.”

At that stage, the board got involved, confidentiality agreements were written up, and information was shared about the company, he said.

“As we went through that process, it became clear that KKR was a potentially good partner for the business going forwards.”

Pepper’s name will not change nor will there be any staff changes, according to Culhane.

He said the board felt this was the best deal for its shareholders.