$ARCC · ARES CAPITAL CORP
Ares Capital Corporation (ARCC) entered into a definitive merger agreement on October 26, 2026 to acquire MidCap Financial Investment Corporation (MFIC) in a two-step merger. Total consideration is $10.88 per fully diluted MFIC share, comprising $1.21 in cash (paid by ARCC Adviser) and approximately $9.67 in ARCC common stock. The Exchange Ratio floats based on ARCC's NAV and stock price near closing, with three tiers depending on whether ARCC trades at, above, or above 104.5% of NAV. Apollo affiliates holding over 5% of MFIC have signed voting agreements supporting the deal.
- ARCC will acquire MFIC via a two-step merger with total consideration of $10.88 per fully diluted MFIC share.
- Each MFIC share converts to $1.21 cash (paid by ARCC Adviser) plus ARCC stock valued at approximately $9.67.
- The Exchange Ratio is determined near closing based on ARCC NAV and ARCC stock price, with three pricing tiers.
- Apollo affiliates holding 4,281,394 MFIC shares (over 5% of outstanding) signed voting agreements backing the deal.
- MFIC must pay a $31,360,000 termination fee if it walks away for a superior proposal or changes its board recommendation.
Extended-hours trading shows ARCC at $18.23, down 2.04% from the regular close of $18.61, suggesting initial investor caution about the acquisition. No regular-session trading has occurred since the filing.
The largest publicly traded BDC is absorbing a competitor in a deal backed by Apollo's voting commitments, reshaping the BDC landscape.
BDC consolidation continues as larger players absorb smaller peers to scale portfolios and reduce expense ratios. ARCC, already the largest publicly traded BDC by market cap at $13.36B, adds MFIC's portfolio in a deal structured to preserve ARCC's RIC tax status.
The deal requires MFIC stockholder approval, HSR clearance, and NASDAQ listing approval. MFIC can terminate for a superior proposal, and the Exchange Ratio exposes ARCC shareholders to dilution risk if ARCC trades above 104.5% of NAV at closing.