Key Takeaways
- • Ares Capital has agreed to acquire Apollo Global Management's MidCap Financial Investment Corporation in a $2.6bn cash-and-stock transaction, according to Reuters.
- • MidCap shareholders would receive $10.88 per fully diluted share, comprising approximately $1.21 in cash and $9.67 in Ares Capital stock, a premium of more than 30% to MidCap's previous closing price.
- • The combined platform would expand Ares Capital's direct lending portfolio to more than 800 companies across a broader set of industries and financial sponsors.
- • The deal, expected to close in the first half of 2027, is reportedly expected to increase Ares Capital's core earnings per share.
- • The transaction extends consolidation across the publicly traded private credit sector, which faces pressure as several business development companies trade at substantial discounts to net asset value over loan quality concerns.
Summary
Ares Capital has agreed to acquire MidCap Financial Investment Corporation, the publicly traded business development company (BDC) managed by Apollo Global Management, in a $2.6bn cash-and-stock transaction, according to a report by Reuters. The deal extends consolidation across the listed private credit sector at a time when a number of BDCs trade well below net asset value amid concerns about loan quality.
The transaction values MidCap at $10.88 per fully diluted share. The consideration consists of approximately $1.21 in cash and $9.67 in Ares Capital stock, representing a premium of more than 30% to MidCap's previous closing price. The mix of cash and stock leaves MidCap shareholders with exposure to the combined entity following completion.
The acquisition is reportedly set to expand Ares Capital's direct lending portfolio to more than 800 companies. The enlarged book would add exposure to middle-market borrowers across a wider range of industries and to additional financial sponsors. Reuters reports that the deal is expected to close in the first half of 2027 and is anticipated to increase Ares Capital's core earnings per share.
Wells Fargo is advising Ares Capital and providing $750m in financing for the transaction. Moelis is advising MidCap's special committee. Bloomberg has also reported the agreement, framing it as a $2.6 billion deal for MidCap Financial.
The transaction values MidCap at $10.88 per fully diluted share. The consideration consists of approximately $1.21 in cash and $9.67 in Ares Capital stock, representing a premium of more than 30% to MidCap's previous closing price. The mix of cash and stock leaves MidCap shareholders with exposure to the combined entity following completion.
The acquisition is reportedly set to expand Ares Capital's direct lending portfolio to more than 800 companies. The enlarged book would add exposure to middle-market borrowers across a wider range of industries and to additional financial sponsors. Reuters reports that the deal is expected to close in the first half of 2027 and is anticipated to increase Ares Capital's core earnings per share.
Wells Fargo is advising Ares Capital and providing $750m in financing for the transaction. Moelis is advising MidCap's special committee. Bloomberg has also reported the agreement, framing it as a $2.6 billion deal for MidCap Financial.
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