Ares Capital and MidCap Financial Investment entered into a definitive merger agreement under which Ares Capital will acquire MidCap in a stock-and-cash transaction for a total enterprise value of approximately $2.6 billion. The transaction is expected to further strengthen Ares Capital’s position a publicly traded business development company and Ares Management’s broader position as a 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 MidCap, which did so on the unanimous recommendation of the Special Committee of MidCap independent directors.
Under the terms of the Transaction, MidCap stockholders are expected to receive total consideration of $10.88 per fully diluted share of MidCap 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, MidCap 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 MidCap share represents a premium of approximately 30.1% to MidCap’s closing share price on Oct. 26, 2026, the last trading day prior to the announcement of the Transaction, and a premium of approximately 25.8% to MidCap’s 30-day volume-weighted average share price for the period ending October 26, 2026. MidCap’s preliminary estimate of net asset value per share as of September 30, 2026, is approximately $12.86.1
“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,” Kort Schnabel, CEO of Ares Capital, said. “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.”
Scott Lem, chief financial officer and treasurer of Ares Capital, commented, “We believe the financial merits of this transaction are compelling. 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.”
Tanner Powell, executive chairman and CEO of MidCap, said, “This agreement with Ares Capital represents a value-maximizing transaction that we are pleased to deliver for MFIC stockholders. 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.”
John Zito, co-president of Apollo Asset Management, added, “Apollo has long been committed to delivering positive outcomes wherever we manage investor capital. 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.”
Prior to the closing of the transaction, MidCap 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, MidCap and certain other parties thereto.
In connection with the transaction, Apollo Principal Holdings A 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 MidCap stockholders; however, it is expected that the total number of shares will be lower due to an adjustment in the exchange ratio for the MidCap special dividend. Following completion of the Transaction, and without taking into account the impact of the MidCap special dividend, existing Ares Capital stockholders are expected to own approximately 95% and existing MidCap 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 H1/27, subject to approval of MidCap’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, and the existing Ares Capital Board and management team are expected to remain in place.
Wells Fargo is serving as exclusive financial advisor and Kirkland & Ellis and Latham & Watkins are serving as legal counsel to Ares Capital. Eversheds Sutherland (U.S.) is serving as legal counsel to the independent directors of Ares Capital. Simpson Thacher & Bartlett is serving as legal counsel to MidCap. Moelis is serving as financial advisor and Willkie Farr & Gallagher and Stradley Ronon Stevens & Young are serving as legal counsel to MidCap’s Special Committee.
