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Challenger Unit's Merger With Channel Capital an 'Incremental Positive,' Jarden Says

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Challenger's (ASX:CGF) move to merge its Fidante subsidiary with Channel Capital to form Channel Group is an "incremental positive" for the company, Jarden Research said in a Thursday note.

The company will retain a 45% equity stake in the new group, receive up to AU$172 million in cash payments, and anticipate a pre-tax gain on sale of around AU$100 million in fiscal 2027,

The sale of Fidante into a specialist funds platform is a logical rationalization of the group structure, Jarden said.

Merging into a larger and more diversified platform and stepping back to a 45% minority decreases direct exposure to structural pressure, reduces the management bandwidth consumed by the business, and transforms a persistent earnings drag into a cleaner fee income stream.

However, Jarden said it is difficult to say whether the transaction represents attractive value for shareholders with the headline valuation, price paid, or implied earnings multiple for Channel Group remaining unknown at this stage.

Completion of the transaction is expected in the first half of fiscal year 2027, pending regulatory approvals.

Jarden reaffirmed its neutral rating on Challenger and lifted its price target to AU$9.20 from AU$8.70.

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