Ares Capital Agrees to Buy Apollo-Managed MidCap Financial in $2.6 Billion BDC Deal

Ares Management is funding the cash portion itself, and the $10.88-per-share price sits above MFIC’s market price but below its preliminary $12.86 net asset value.

October 28, 2026

Ares Capital Corporation has agreed to acquire MidCap Financial Investment Corporation (MFIC), the Apollo-managed business development company, in a stock-and-cash deal with a total enterprise value of approximately $2.6 billion. The companies announced the merger agreement on October 27, 2026, after unanimous approval from both boards. MFIC's board acted on the unanimous recommendation of a special committee of its independent directors.

MFIC stockholders are expected to receive $10.88 per fully diluted share. About $1.21 of that comes in cash, provided by a subsidiary of Ares Management Corporation, the parent of Ares Capital's external manager. The remaining $9.67 or so comes in Ares Capital common stock. The price is a premium of roughly 30.1% to MFIC's October 26 closing price and roughly 25.8% to its 30-day volume-weighted average price.

The price is below MFIC's preliminary estimate of its September 30 net asset value per share, approximately $12.86. MFIC's management prepared that estimate, which has not been approved by MFIC's board or reviewed by its auditor. MFIC expects to report third-quarter results on November 5, 2026.

How the Consideration Is Set

Before closing, MFIC expects to pay a special dividend distributing all undistributed taxable income estimated to remain at closing, an amount the companies expect to be meaningful. The Ares Capital stock portion will be reduced dollar for dollar by that dividend.

The number of Ares Capital shares issued will be set by an exchange ratio that values Ares Capital stock at the greater of its NAV per share before closing or its share price. MFIC stockholders also share in 50% of any premium of Ares Capital's share price over NAV, up to a price of 104.5% of NAV, which works out to a maximum of 102.25% of NAV.

Ares Capital may issue up to approximately 41 million shares, though the companies expect the final count to be lower because of the special dividend adjustment. Before accounting for the dividend, existing Ares Capital stockholders would own about 95% of the combined company and MFIC stockholders about 5%.

Portfolio and Earnings

Ares Capital expects the deal to be modestly accretive to core earnings per share. Using September 30, 2026, figures, the combined portfolio would exceed 800 companies and $31 billion of investments at fair value. MFIC's book is expected to add more than 200 incumbent positions and lift the number of sponsors Ares Capital has transacted with to more than 600.

MFIC lends mainly through directly originated first lien senior secured loans to privately held U.S. middle-market companies, which it generally defines as those with under $75 million of EBITDA. It is externally managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management. Ares Capital, the largest publicly traded BDC by market capitalization as of September 30, 2026, previously acquired Allied Capital Corporation and American Capital, Ltd.

Ares Capital CEO Kort Schnabel said the deal brings a diversified portfolio and borrower and sponsor relationships that the company expects to support its long-term growth. CFO Scott Lem said Ares Management's financial support gives MFIC holders additional cash value alongside their Ares Capital equity.

Tanner Powell, MFIC's executive chairman and CEO, said MFIC's adviser and board, on the special committee's recommendation, concluded the transaction is the best path forward for stockholders. John Zito, co-president of Apollo Asset Management, said Apollo has taken steps this year to support stockholder value across its public vehicles and will keep growing its middle-market direct lending business, including the MidCap Financial platform.

Approvals and Financing

Two Apollo affiliates, Apollo Principal Holdings A, L.P. and MidCap Financial Trust, which together beneficially own 5.2% of MFIC's common stock, have signed voting and support agreements with Ares Capital. Wells Fargo has agreed, subject to customary conditions, to provide $750 million of additional secured financing that can be used to support the deal.

The merger is expected to close in the first half of 2027, subject to MFIC stockholder approval, regulatory approvals and other customary conditions. MFIC will run its business in the ordinary course until then, subject to interim operating covenants. Ares Capital Management LLC will remain Ares Capital's external manager, and Ares Capital's board and management team are expected to stay in place.

Wells Fargo is Ares Capital's exclusive financial advisor, and Moelis & Company is financial advisor to MFIC's special committee.