I suspected they tried to assassinate him when the russian army "accidentally" launched rocket attack on wagner camp. He has been a thorn on Russian military side for weeks now. Prigozhin probably saw no other choice but to launch a counter attack.

For Putin, this is probably the less worst deal. Trying to purge Wagner group at this juncture could cause civil war, when the situation in Ukraine is already critical. It could rally the opposition resistance centering around Wagner group just like what happen in Myanmar. Meanwhile arresting or killing Prigozhin could also demoralize Wagner mercs and without Wagner, the war in Ukraine will get worse. Even without that, after this incident, the Wagner mercs probably already demoralized enough, they must be wondering for their future, especially now that their boss is practically in exile. For once in his career, Putin is so vulnerable now. He should have acted to mediate the conflict between Prigozhin and ministry of defence weeks ago. Prigozhin himself is in tight spot, he can't go to the west, he will be arrested for war crimes immediately. He also can't go to other neutral countries, nobody want accept this hot potato that was seek by both the west and Russia. Only Lukashenko can guarantee his safety and he did it to save the war effort in Ukraine.