Key Takeaways
- • Ares Capital (ARCC.O) agreed on October 27, 2026 to acquire Apollo's MidCap Financial Investment Corp (MFIC.O) in a $2.6 billion cash-and-stock deal, according to Reuters.
- • MidCap shareholders will receive $10.88 per fully diluted share, comprising about $1.21 in cash and $9.67 in Ares Capital stock, a premium of more than 30% to MidCap's Monday close.
- • MidCap shares jumped more than 24% on the announcement, and the transaction is expected to close in the first half of 2027 and boost Ares Capital's core earnings per share.
- • The deal extends Ares Capital's direct lending franchise to more than 800 portfolio companies and makes it the buyer of all three of the largest BDCs operating at its 2004 IPO, per CEO Kort Schnabel.
- • The transaction adds to consolidation among publicly traded private credit funds, as BlackRock TCP Capital, Investcorp Credit Management BDC and WhiteHorse Finance have all said they are weighing strategic options.
Summary
Ares Capital said on Tuesday, October 27, 2026, that it will buy Apollo's MidCap Financial Investment Corp in a $2.6 billion cash-and-stock transaction, according to Reuters. The acquisition strengthens Ares Capital's presence in direct lending to mid-sized businesses and expands its portfolio to more than 800 companies across a broader range of industries and financial sponsors.
MidCap shareholders will receive $10.88 per fully diluted share, consisting of about $1.21 in cash and $9.67 in Ares Capital stock. The offer represents a premium of more than 30% to MidCap's Monday close, and MidCap shares jumped more than 24% following the announcement. For Apollo, the deal marks another step in streamlining its portfolio of publicly traded investment vehicles.
The transaction comes amid growing consolidation among publicly traded business development companies (BDCs), which give investors access to diversified pools of private credit assets. BlackRock TCP Capital, Investcorp Credit Management BDC and WhiteHorse Finance have all said this year that they are weighing strategic options, suggesting consolidation could pick up. Reuters noted that these vehicles are trading at steep discounts to net asset value as investors question the quality of the loans the funds have made.
Ares Capital CEO Kort Schnabel said that with the acquisition the firm will have bought all three of the largest BDCs operating at the time of its 2004 IPO, and that it is well positioned to pursue further opportunities as they emerge. Schnabel said the company has "consistently used periods of market volatility and dislocation to create differentiated opportunities for our shareholders while building greater scale." Ares Capital is the largest publicly traded BDC by market capitalization. RBC analyst Kenneth Lee said Ares Capital has a track record of acquiring challenged BDC portfolios at a discount to NAV, citing Allied Capital and American Capital, and that the MFIC transaction "would seem similar to us."
The deal is expected to close in the first half of 2027. Wells Fargo advised Ares Capital and is providing $750 million in financing for the transaction, while Moelis advised MidCap's special committee.
MidCap shareholders will receive $10.88 per fully diluted share, consisting of about $1.21 in cash and $9.67 in Ares Capital stock. The offer represents a premium of more than 30% to MidCap's Monday close, and MidCap shares jumped more than 24% following the announcement. For Apollo, the deal marks another step in streamlining its portfolio of publicly traded investment vehicles.
The transaction comes amid growing consolidation among publicly traded business development companies (BDCs), which give investors access to diversified pools of private credit assets. BlackRock TCP Capital, Investcorp Credit Management BDC and WhiteHorse Finance have all said this year that they are weighing strategic options, suggesting consolidation could pick up. Reuters noted that these vehicles are trading at steep discounts to net asset value as investors question the quality of the loans the funds have made.
Ares Capital CEO Kort Schnabel said that with the acquisition the firm will have bought all three of the largest BDCs operating at the time of its 2004 IPO, and that it is well positioned to pursue further opportunities as they emerge. Schnabel said the company has "consistently used periods of market volatility and dislocation to create differentiated opportunities for our shareholders while building greater scale." Ares Capital is the largest publicly traded BDC by market capitalization. RBC analyst Kenneth Lee said Ares Capital has a track record of acquiring challenged BDC portfolios at a discount to NAV, citing Allied Capital and American Capital, and that the MFIC transaction "would seem similar to us."
The deal is expected to close in the first half of 2027. Wells Fargo advised Ares Capital and is providing $750 million in financing for the transaction, while Moelis advised MidCap's special committee.
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