Ares Capital Corporation Announces Agreement to Acquire MidCap Financial Investment Corp

Overview of Transaction

On October 26, 2026, Ares Capital Corporation (NASDAQ: ARCC) entered into an Agreement and Plan of Merger to acquire MidCap Financial Investment Corporation (NASDAQ: MFIC). The acquisition will proceed via a two-step merger:

1. First Merger: Union Acquisition Sub Inc. merges with and into MFIC, with MFIC continuing as a wholly owned subsidiary of ARCC.
2. Second Merger: MFIC merges with and into Union Acquisition Sub LLC, which survives as a direct, wholly owned subsidiary of ARCC.

Merger Consideration & Pricing Mechanism

• Total Implied Consideration: Approximately $10.88 per fully diluted share of MFIC common stock as of signing.
• Cash Component: $1.21 per share in cash, payable directly by Ares Capital Management LLC (the "ARCC Adviser").
• Stock Component: ARCC common stock equal to approximately $9.67 per share, subject to downward adjustment for any post-signing tax dividends declared by MFIC prior to closing.
• Exchange Ratio Mechanism: Determined within 48 hours prior to closing based on ARCC's Net Asset Value (NAV) per share and ARCC's market price:
  • ARCC Price ≤ 100% NAV: Exchange ratio equals ($9.67 minus post-signing tax dividend) / ARCC NAV.
  • 100% NAV < ARCC Price ≤ 104.5% NAV: Formula incorporates 50% of the market price premium to NAV.
  • ARCC Price > 104.5% NAV: Fixed at a 102.25% premium multiplier over ARCC market price.

Key Deal Protections and Conditions

• Voting Agreements: Apollo Principal Holdings A, L.P. and MidCap Financial Trust entered support agreements committing an aggregate of 4,281,394 shares of MFIC to vote in favor of the transaction.
• Breakup Fee: MFIC is subject to a $31,360,000 termination fee in the event of entry into a superior proposal or an adverse recommendation change by the MFIC Board. ARCC does not have a termination fee obligation.
• Required Approvals: Requires MFIC stockholder approval (majority of outstanding shares), expiration/termination of the HSR Act waiting period, and effectiveness of ARCC's Form N-14 registration statement. No vote of ARCC stockholders is required.