Ares Capital to Acquire MidCap Financial in $2.6 Billion Cash-and-Stock Deal
Ares Capital (ARCC) has entered into an agreement to acquire MidCap Financial (MFIC) in a transaction valued at $2.6 billion, including debt. The deal involves a payment of $10.88 per share for MidCap, representing a 30.1% premium over its recent closing price, structured through a combination of $1.21 per share in cash and the remainder in stock. The merger is expected to expand Ares Capital's investment portfolio from $29.2 billion to over $31 billion, increasing its reach to more than 800 portfolio companies. This scale is intended to enhance diversification and lower the company's overall risk profile. While MidCap recently faced challenges including a dividend cut and declining net asset value, Ares Capital expects the transaction to be modestly accretive to core earnings per share. For investors, the acquisition aims to fortify Ares Capital's long-standing history of stable dividends. Although the integration introduces exposure to MidCap's legacy portfolio credit risks, the increased scale and excess taxable income held by Ares are expected to provide a cushion for maintaining its current dividend rate.
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