Ares Capital will acquire MidCap Financial Investment from Apollo for $2.6 billions.

Reuters, October 27 - Ares Capital (ARCC.O) said on Tuesday it will acquire Apollo’s MidCap Financial Investment (MFIC.O) in a stock-and-cash deal valuing the business at approximately $2.6 billion, aiming to strengthen its market position in direct lending to mid-sized companies.

Key details are as follows:

• The deal values MidCap Financial Investment at a premium of over 30% compared to its Monday closing price of $8.36 per share

• Ares Capital’s shares dropped 2.4% in premarket trading, while MidCap shares surged 18%

• MidCap shareholders will receive $10.88 per share on a fully diluted basis, including approximately $1.21 in cash and $9.67 in Ares Capital stock

• Ares Capital is the largest publicly traded business development company, managed by a subsidiary of alternative investment manager Ares Management

• MidCap Financial Investment is a closed-end fund externally managed by a subsidiary of asset manager Apollo Global Management APO.N

• The two companies stated that the deal will provide Ares Capital with MidCap’s “highly attractive” yield senior secured investments and “modestly” increase core earnings

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