Ares Capital to Buy MidCap Financial Investment in 2.6 Billion Dollar Deal

Ares Capital said on Tuesday, October 27, 2026, that it will buy MidCap Financial Investment in a stock and cash deal with an enterprise value of about 2.6 billion dollars. The two companies announced a definitive merger agreement unanimously approved by both boards. Reuters reported the deal the same morning, and an SEC filing summary put the related 8-K at 6:12 a.m. Eastern on October 27.

What stockholders receive

MidCap stockholders are expected to receive 10.88 dollars for each fully diluted share. About 1.21 dollars a share will be paid in cash by a subsidiary of Ares Management, and about 9.67 dollars a share in Ares Capital stock, adjusted for a special dividend MidCap expects to pay before closing.

The price is a premium of about 30.1 percent to MidCap's Monday, October 26 close, which Reuters put at 8.36 dollars, and about 25.8 percent to its 30 day volume weighted average price to October 26. MidCap put its preliminary net asset value at about 12.86 dollars a share as of September 30, 2026. In premarket trading, Ares Capital shares fell 2.4 percent and MidCap shares rose 18 percent, according to Reuters.

A larger loan book

Ares Capital is the largest publicly traded business development company in the United States, managed by a subsidiary of Ares Management. MidCap is a closed end fund externally managed by a subsidiary of Apollo Global Management. The companies said the deal should be modestly accretive to Ares Capital's core earnings per share, support future dividends, and add MidCap's portfolio of senior secured investments.

At closing, the combined portfolio is expected to cover more than 800 companies and more than 31 billion dollars of investments at fair value as of September 30, 2026, adding more than 200 MidCap positions and expanding sponsor relationships to more than 600. Before closing, MidCap expects to pay a special dividend of all its undistributed taxable income estimated at closing, and the stock consideration will be reduced dollar for dollar for that dividend.

"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," said Kort Schnabel, the chief executive officer of Ares Capital. Tanner Powell, MidCap's executive chairman and chief executive officer, said: "This agreement with Ares Capital represents a value-maximizing transaction that we are pleased to deliver for MFIC stockholders."

Shares, financing and closing

Ares Capital may issue up to about 41 million shares to MidCap stockholders, with the final number expected to be lower after the special dividend adjustment. Without that adjustment, existing Ares Capital stockholders would own about 95 percent of the combined company and MidCap stockholders about 5 percent. Wells Fargo agreed, subject to conditions, to provide 750 million dollars of additional secured financing.

Apollo affiliates that together own 5.2 percent of MidCap's outstanding stock have signed voting and support agreements with Ares Capital. An SEC filing summary put MidCap's termination fee at 31.36 million dollars. The MidCap board acted on the unanimous recommendation of its special committee of independent directors.

The deal is expected to close in the first half of 2027, subject to MidCap stockholder approval, regulatory approvals and other customary conditions. Ares Capital's board and management are expected to remain in place, and the combined company will remain externally managed by Ares Capital Management LLC.