Insignia Financial Ltd. (ASX:IFL) is one market mover making waves this week in Australia. Shares in the company surged to their highest in more than three years on Monday following a jaw-dropping A$2.87 billion ($1.78 billion) takeover proposal from U.S.-based CC Capital Partners (WA:CPAP).

Insignia, in a statement, said it received a non-binding, indicative offer from CC Capital to acquire all shares in it at A$4.30 cash per share. That's a 21.5% premium to Insignia's last closing price on Friday—a tempting offer by any standard. Naturally, the market took notice. Insignia shares surged 12% to A$3.96 on Monday, hitting their highest point since late November 2021.

This follows Insignia spurning a lower A$2.67 billion ($1.69 billion) bid from Bain Capital last week. Insignia's board thanked Bain for its bid—at A$4.00 cash per share—which implied a 17.6% premium at the time but it wasn't fair value for shareholders. Now, CC Capital has come in with a sweeter deal—a 7.5 percent premium to Bain's offer. So the ball is squarely in Insignia's court.

"The Board of Insignia Financial and its financial and legal advisers are evaluating the Indicative Proposal to determine if there is a potential that would be in the best interests of shareholders to enter into discussions with CC Capital," the company said in a statement.

A Bit of Background on Insignia

Founded in 1846, Insignia Financial is a provider of financial advice, superannuation, wrap platforms, and asset management. But the company hasn't had smooth sailing the whole way. Formerly called IOOF, the firm was embroiled in a scandal in 2018 when the Australian Prudential Regulation Authority (APRA) tried to ban five senior executives after members were paid from its superannuation funds due to an accounting error.

The inquiry by APRA ultimately led to the then-managing director, Christopher Kelaher, exiting the company in what was described as a "mutual agreement."

Zoom ahead to today, and it appears that Insignia is caught up in a corporate tug-of-war, with CC Capital and Bain fighting for the control of the wealth manager. Whether the company goes with CC Capital's offer or waits for a better one remains to be seen, but one thing is clear: the market feeds on the drama.

Expert Insights

The Australian money manager said its board was reviewing CC Capital's proposal to determine if it aligns with the best interests of shareholders.

"Insignia's board might push for a higher premium, given the company's pivotal role in Australia's superannuation industry. But let's be real-any buyer will have to do more than just win over the board and shareholders; they'll need to get past regulators too," said Stella Ong, market analyst at share trading platform Superhero.

"With Insignia's forward P/E still lagging behind that of AMP, we could see more suitors stepping up," she added, referencing rival Australian investment manager AMP. "This story might have a few more twists left."