Why Is Embark Offering a 37% Premium to Take Over Mayfield Childcare?

Embark’s Strategic Move into Mayfield

Embark Early Education Limited (ASX – EVO) has formally launched an off-market takeover bid for Mayfield Childcare Limited (ASX – MFD), offering Mayfield shareholders a compelling premium of approximately 37% over the price prior to Embark’s initial 19.9% stake acquisition. The offer, announced on 5 January 2026, provides shareholders with a choice between receiving new Embark shares or a cash payment of A$0.50 per Mayfield share.

This bid represents a significant consolidation move in the Australian early childhood education sector, with Embark aiming to integrate Mayfield’s 45 childcare centres into its existing network of 39 centres across multiple states. The combined entity would operate 84 centres, enhancing geographic reach and operational scale.

Offer Details and Shareholder Options

Mayfield shareholders can elect to receive either one Embark share for every 1.24 Mayfield shares held (the scrip consideration) or a cash payment of A$0.50 per share. The scrip consideration is valued based on Embark’s five-day volume weighted average price (VWAP) of $0.6193 leading up to the original bidder’s statement, implying a premium to Mayfield’s recent trading prices.

If shareholders do not make an election, the default consideration will be the scrip option. Embark has emphasised that shareholders accepting the scrip consideration will gain access to a larger, more liquid market and the benefits of Embark’s operational expertise and portfolio growth strategy.

Conditions and Funding

The takeover bid is conditional on Embark acquiring at least 90% of Mayfield shares, enabling compulsory acquisition of remaining shares. Embark currently holds a 19.9% stake in Mayfield, acquired at $0.50 per share in late October 2025.

Funding for the cash consideration is secured through a combination of Embark’s existing cash reserves of $10 million, a recent institutional placement raising $12 million, and a proposed institutional placement planned for January 2026. This financial backing ensures Embark’s capacity to meet the cash obligations of the bid.

Strategic Rationale and Integration Plans

Embark’s acquisition strategy focuses on disciplined, acquisition-led growth with a decentralised operating model that preserves centre-level autonomy while leveraging centralised support functions. The integration of Mayfield is expected to yield operational efficiencies, broaden geographic coverage, and strengthen Embark’s position in a consolidating childcare market.

Post-acquisition, Embark plans a detailed review of Mayfield’s operations to identify opportunities for occupancy growth, operational improvements, and alignment of administrative functions. While no immediate material changes to Mayfield’s brand or operations are planned, Embark anticipates leveraging best practices across the combined portfolio.

Risks and Considerations for Shareholders

Embark’s bidder’s statement outlines various risks, including the conditional nature of the offer, integration challenges, and potential fluctuations in Embark’s share price affecting the value of scrip consideration. Shareholders are cautioned that the offer’s success depends on achieving the minimum acceptance threshold and that minority shareholders may face reduced influence and liquidity if Embark does not acquire full ownership.

Tax implications, including potential capital gains tax rollover relief for shareholders electing scrip consideration, are also detailed, with advice for shareholders to seek independent professional guidance.

Next Steps for Shareholders

The offer opens on 5 January 2026 and closes at 7 – 00 pm Sydney time on 5 March 2026, unless extended. Shareholders are encouraged to carefully review the bidder’s statement and consider their options in light of their individual circumstances. Embark has established an offer information line and online acceptance portal to facilitate shareholder participation.