What Ares Is Buying
Ares Capital reached a cash and stock agreement to acquire MidCap Financial Investment Corp. from Apollo Global Management. According to a Tuesday statement, each MFIC share would be valued at $10.88, with roughly $1.21 paid in cash and $9.67 delivered as Ares Capital stock.
Why Now
This deal arrives as private credit managers look to unload weaker funds in a shaky market marked by investor redemptions. That cleanup has drawn buyers searching for discounts across a private credit arena estimated at roughly $1.8 trillion.
Multiple listed funds have said they're evaluating strategic alternatives, potentially including a sale. Bloomberg previously reported that BlackRock's TCP Capital Corp., WhiteHorse Finance Inc. and Investcorp Credit Management BDC Inc. are among those considering their choices.
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How Markets Reacted
MFIC - which trades publicly as a business development company - jumped 18% in early New York trading after the announcement. Ares Capital dipped 2.6% in the same early session.
The bottom line
Ares Capital is paying a $2.6 billion enterprise value, with MFIC holders set to receive $10.88 per share in a mix of cash and Ares Capital stock, a price about 30% above Monday's close. For your portfolio, the first take looked like standard deal math as the target rallied and the buyer slipped in early trading.
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