Ares Capital to Acquire MidCap Financial in $2.6 Billion Stock-and-Cash Deal

Ares Capital Corporation (NASDAQ: ARCC) and MidCap Financial Investment Corporation (NASDAQ: MFIC) announced they have entered into a definitive merger agreement under which Ares Capital will acquire MFIC in a stock-and-cash transaction with a total enterprise value of approximately $2.6 billion, according to a report from fxnewsgroup.com, corroborated by the Joplin Globe. The deal has been unanimously approved by both companies' boards, with MFIC's board acting on the unanimous recommendation of a Special Committee of independent directors.

Consideration and Exchange-Ratio Mechanics

Under the terms disclosed, MFIC stockholders are expected to receive total consideration of $10.88 per fully diluted share. That figure is made up of approximately $1.21 per share in cash, funded by a subsidiary of Ares Management, and approximately $9.67 per share in Ares Capital common stock, as adjusted for cash received from MFIC's planned special dividend, per fxnewsgroup.com's reporting.

The mechanics tying the stock portion to that dividend are specific. Prior to closing, MFIC expects to declare and pay a special dividend distributing to stockholders all of its undistributed taxable income estimated to remain as of closing, which the companies describe as expected to be meaningful. To offset that payout, the Ares Capital stock consideration will be reduced dollar-for-dollar to account for the special dividend. The number of Ares Capital shares actually issued will then be calculated using an exchange ratio based on a value for Ares Capital stock equal to the greater of (i) Ares Capital's net asset value per share immediately prior to closing or (ii) Ares Capital's share price at that time.

A further feature allows MFIC stockholders to participate in any premium at which Ares Capital shares trade above net asset value. Specifically, 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 the companies state represents a maximum of 102.25% of NAV, according to fxnewsgroup.com's reporting of the deal terms. Arithmetically, that maximum corresponds to half of the 4.5-percentage-point spread between 100% of NAV and the 104.5% cap added to the NAV baseline (100% + 4.5% / 2 = 102.25%); the companies disclosed the 102.25% figure itself, not this derivation.

Premium to Recent Trading and NAV Context

The $10.88 per-share consideration represents a premium of approximately 30.1% to MFIC's closing share price on October 26, 2026, the last trading day before the announcement, and a premium of approximately 25.8% to MFIC's 30-day volume-weighted average share price through that date, according to the deal announcement cited by fxnewsgroup.com. Separately, MFIC's preliminary estimate of net asset value per share as of September 30, 2026 was approximately $12.86, also per fxnewsgroup.com's reporting. On those two disclosed figures, the headline consideration sits below that preliminary NAV estimate — a comparison investors are likely to weigh alongside the premium to recent trading, though the companies did not frame the deal in those terms.

Timeline, Approvals and Financing

The transaction is expected to close in the first half of 2027, subject to approval of MFIC's stockholders, applicable regulatory approvals, and other customary closing conditions, per the companies' statement. In connection with the deal, Apollo Principal Holdings A, L.P. and MidCap Financial Trust, affiliates of Apollo Management that together beneficially own 5.2% of MFIC's outstanding common stock, have entered into voting and support agreements with Ares Capital, a step that commits a meaningful minority block to back the transaction ahead of the formal shareholder vote.

On financing, Wells Fargo has agreed, subject to customary conditions, to provide $750 million of additional secured financing that can be used to support the transaction, according to fxnewsgroup.com's reporting. Upon completion, 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, suggesting continuity in the combined entity's operating structure rather than a management overhaul.

Advisors and Executive Commentary

Wells Fargo is serving as exclusive financial advisor to Ares Capital, with Kirkland & Ellis LLP and Latham & Watkins LLP as legal counsel, and Eversheds Sutherland (US) LLP advising Ares Capital's independent directors. Simpson Thacher & Bartlett LLP is serving as legal counsel to MFIC, while Moelis & Company LLC is financial advisor and Willkie Farr & Gallagher LLP and Stradley Ronon Stevens & Young, LLP are legal counsel to MFIC's Special Committee, per the deal announcement.

Ares Capital CEO Kort Schnabel said the acquisition "reinforces our leading competitive position, advances our strategic goals and enhances the earnings power of our company," while CFO and Treasurer Scott Lem said "the financial merits of this transaction are compelling." MFIC Executive Chairman and CEO Tanner Powell called the agreement "a value-maximizing transaction that we are pleased to deliver for MFIC stockholders," according to statements carried by fxnewsgroup.com.

Ares Capital was the largest publicly traded business development company by market capitalization as of June 30, 2026, according to an SEC filing, and the Joplin Globe reported the MFIC transaction is expected to further strengthen Ares Capital's position as the largest publicly traded BDC and Ares Management's broader standing as a leading direct lending platform to U.S. middle-market companies.

Bottom Line

The Ares Capital-MFIC merger pairs a premium to recent trading with a dividend-linked adjustment mechanism: MFIC's pre-closing special dividend reduces the Ares Capital stock consideration dollar-for-dollar, so cash distributed before closing is offset within the disclosed $10.88 per fully diluted share of total consideration, while any premium of Ares Capital shares above NAV is shared 50/50 up to a 104.5% of NAV cap. With a first-half 2027 closing target still contingent on an MFIC shareholder vote and regulatory approvals, and with Apollo-affiliated holders of 5.2% of MFIC stock committed via voting and support agreements, the terms are set, though — as the companies' own disclosure indicates — the final share count and the size of the special dividend will not be fixed until closer to closing.