Ares Capital Corporation (NASDAQ:ARCC) ("Ares Capital") and MidCap Financial Investment Corporation (NASDAQ:MFIC) ("MFIC") announced today that they have entered into a definitive merger agreement under which Ares Capital will acquire MFIC in a stock-and-cash transaction for a total enterprise value of approximately $2.6 billion (the "Transaction"). The Transaction is expected to further strengthen Ares Capital’s position as the largest publicly traded business development company ("BDC") and Ares Management Corporation’s (NYSE:ARES) ("Ares Management") broader position as a leading direct lending platform to U.S. middle-market companies. The Transaction has been unanimously approved by the Board of Directors of Ares Capital and the Board of Directors of MFIC, which did so on the unanimous recommendation of the Special Committee of MFIC independent directors.
Under the terms of the Transaction, MFIC stockholders are expected to receive total consideration of $10.88 per fully diluted share of MFIC common stock, consisting of approximately $1.21 per share in cash, provided by a subsidiary of Ares Management, and approximately $9.67 per share in Ares Capital common stock, as adjusted for the cash received from MFIC’s special dividend described below. Prior to closing, MFIC expects to declare and pay a special dividend to distribute to its stockholders all of its undistributed taxable income estimated to remain as of the closing of the Transaction, which is expected to be meaningful. The Ares Capital stock consideration will be reduced dollar-for-dollar to account for the special dividend, and the number of shares will be calculated based on an exchange ratio using a value for the Ares Capital common stock equal to the greater of (i) Ares Capital’s NAV per share prior to closing and (ii) Ares Capital’s share price. In addition, MFIC stockholders will share in 50% of any premium of Ares Capital’s share price in excess of NAV, up to 104.5% of NAV, which represents a maximum of 102.25% of NAV.
The consideration of $10.88 per MFIC share represents a premium of approximately 30.1% to MFIC’s closing share price on October 26, 2026, the last trading day prior to the announcement of the Transaction, and a premium of approximately 25.8% to MFIC’s 30-day volume-weighted average share price for the period ending October 26, 2026. MFIC’s preliminary estimate of net asset value per share as of September 30, 2026, is approximately $12.86.1
Financially Attractive Combination with Significant Strategic Benefits
Ares Capital believes the Transaction will create compelling benefits for stockholders:
Accretive to earnings and supports future dividends. The Transaction is expected to be modestly accretive to Ares Capital’s core earnings per share, further supporting future dividends. The combined company and its affiliates expect to benefit from MFIC’s portfolio of senior secured investments with compelling current yields.
Greater scale and diversification. The addition of MFIC’s healthy and broad-based assets will further diversify Ares Capital’s portfolio across borrowers, industries and sponsors. At closing, the Transaction is expected to increase Ares Capital’s pro forma portfolio to more than 800 portfolio companies and over $31 billion of investments at fair value as of September 30, 2026.
Broader sponsor and market connectivity. MFIC’s portfolio is expected to add more than 200 incumbent positions and further expand the number of sponsors Ares Capital has transacted with to more than 600. These relationships are expected to enhance Ares Capital’s long-standing core middle-market presence and to support future investment opportunities, resulting in greater financial resilience and strengthening its ability to grow through dynamic market environments.
Continued industry leadership. The Transaction builds on Ares Capital’s nearly two-decade track record of successful strategic activity, including its prior acquisitions of Allied Capital Corporation and American Capital, Ltd., which has been an important contributor to its long-term growth and value creation.
"We’re excited to announce our acquisition of MFIC, which we believe reinforces our leading competitive position, advances our strategic goals and enhances the earnings power of our company," said Kort Schnabel, Chief Executive Officer of Ares Capital. "The MFIC transaction brings a diversified portfolio and valuable borrower and sponsor relationships, which, when combined with our differentiated private credit investment capabilities, we expect will bolster the long-term growth profile of Ares Capital. In addition, we believe this transaction will further build on our successful track record of acquiring publicly traded BDCs and supporting attractive risk-adjusted returns over time."
"We believe the financial merits of this transaction are compelling," said Scott Lem, Chief Financial Officer and Treasurer of Ares Capital. "We expect the transaction to be accretive to core earnings and supportive of our future dividends, while preserving the balance sheet strength and financial flexibility that have been central to Ares Capital’s long-term performance. Importantly, the financial support from Ares Management will provide MFIC stockholders with additional cash value alongside attractive equity in Ares Capital’s industry-leading business."
"This agreement with Ares Capital represents a value-maximizing transaction that we are pleased to deliver for MFIC stockholders," said Tanner Powell, Executive Chairman and Chief Executive Officer of MFIC. "It provides value meaningfully above MFIC’s current stock price and gives our stockholders an investment in the largest publicly traded BDC, which has a history of creating stockholder value through successful acquisitions. MFIC’s investment adviser and Board, upon recommendation of its Special Committee, have concluded that this transaction represents the best path forward for MFIC’s stockholders."
"Apollo has long been committed to delivering positive outcomes wherever we manage investor capital," said John Zito, Co-President of Apollo Asset Management. "Throughout this year we have taken active steps to support stockholder value across our public vehicles, including through this transaction. Importantly, Apollo will continue to invest in and grow our middle-market direct lending franchise, including through the MidCap Financial platform."
Additional Transaction Details
Prior to the closing of the Transaction, MFIC will operate its business in the ordinary course, subject to certain interim operating covenants set forth in the Agreement and Plan of Merger among Ares Capital, MFIC and certain other parties thereto (the "Merger Agreement").
In connection with the Transaction, Apollo Principal Holdings A, L.P. and MidCap Financial Trust, each an affiliate of Apollo Management and which together beneficially own 5.2% of MFIC’s outstanding common stock, have entered into voting and support agreements with Ares Capital.
As part of the Transaction, Ares Capital may issue up to approximately 41 million shares of common stock to MFIC stockholders; however, it is expected that the total number of shares will be lower due to an adjustment in the exchange ratio for the MFIC special dividend. Following completion of the Transaction, and without taking into account the impact of the MFIC special dividend, existing Ares Capital stockholders are expected to own approximately 95% and existing MFIC stockholders are expected to own approximately 5% of the combined company.
Wells Fargo has also agreed, subject to customary conditions, to provide $750 million of additional secured financing that can be used to support the Transaction.
The Transaction is expected to close in the first half of 2027, subject to approval of MFIC’s stockholders, applicable regulatory approvals and the satisfaction of other customary closing conditions. Upon completion of the Transaction, Ares Capital will continue to be externally managed by Ares Capital Management LLC, and the existing Ares Capital Board and management team are expected to remain in place.