ARES CAPITAL CORP 8-K

Summary

Ares Capital agreed to acquire MidCap Financial Investment Corporation (MFIC), a business development company focused mainly on directly originated senior secured loans to U.S. middle-market companies, in a cash-and-stock merger. Ares expects the combination to expand its direct-lending scale and diversification and to modestly increase core earnings per share, supporting future dividends. The transaction is expected to close in the first half of 2027, subject to MFIC stockholder approval, regulatory approvals and other customary conditions.

Key Figures

• Consideration is $10.88 per fully diluted MFIC share as of the agreement date: approximately $1.21 in cash, funded by an Ares Management subsidiary, plus approximately $9.67 in Ares Capital shares. The stated value represents a 30.1% premium to MFIC’s 10/26/2026 closing price and a 25.8% premium to its 30-day volume-weighted average price. MFIC’s preliminary 9/30/2026 NAV estimate was approximately $12.86 per share.
• The stock portion will be reduced dollar-for-dollar for MFIC’s special dividend of undistributed taxable income. The exchange ratio uses Ares Capital’s NAV per share and share price; MFIC stockholders share in 50% of any Ares share-price premium to NAV through 104.5% of NAV, with the stock value capped at 102.25% of NAV.
• At closing, Ares expects its portfolio to exceed 800 companies and $31B of investments at fair value, including more than 200 additional incumbent positions; the combined platform is expected to have transacted with more than 600 sponsors. Up to approximately 41 million Ares shares may be issued. Excluding the effect of MFIC’s special dividend, existing Ares stockholders are expected to own approximately 95% of the combined company and MFIC stockholders approximately 5%.
• Wells Fargo agreed, subject to customary conditions, to provide $750M of additional secured financing that may support the transaction. MFIC’s Apollo-affiliated stockholders agreed to vote 4,281,394 shares, or 5.2% of MFIC’s outstanding common stock, in favor.
• MFIC expects to report final 9/30/2026 NAV with its Q3 2026 results, expected 11/05/2026. MFIC must pay a $31.36M termination fee in specified circumstances, including certain terminations related to a superior proposal or a change in its board recommendation; Ares owes no termination fee.

Investor Takeaways

• Watch for MFIC stockholder and regulatory approvals and completion by the expected first half of 2027; failure to secure approvals or satisfy closing conditions could prevent the combination.
• After closing, reported core earnings per share and dividends will test Ares’s expectation of modest earnings accretion and dividend support. The combined portfolio’s projected scale—more than 800 companies and over $31B of investments—will also test the stated diversification and market-presence rationale.