Ares Capital Corporation filed a Form 8-K on October 27, 2026, disclosing that on October 26, 2026, it entered into an Agreement and Plan of Merger with MidCap Financial Investment Corporation in a two-step merger transaction.

Key Highlights

  • Total consideration: According to the filing, the Merger Consideration represents total consideration of $10.88 per fully diluted share of MFIC Common Stock as of the date of the Merger Agreement.
  • Cash component: Each MFIC share will receive $1.21 in cash, to be paid by ARCC Adviser, not by ARCC itself.
  • Stock component: The remaining approximately $9.67 per share will be paid in ARCC Common Stock, subject to adjustment based on an Exchange Ratio determined no earlier than 48 hours before closing.
  • Stockholder vote: The filing states that approval of at least a majority of outstanding MFIC Common Stock entitled to vote is required; no vote of ARCC stockholders is required.
  • Support agreements: Certain MFIC stockholders collectively owning more than 5% of MFIC's outstanding common stock entered into voting and support agreements in favor of the merger.
  • Tax treatment: The mergers, taken together, are intended to qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, according to the filing.

Ares Capital's Two-Step Merger Structure and Consideration Terms

According to the filing, the transaction is structured as two sequential mergers. First, Union Acquisition Sub Inc., a wholly-owned subsidiary of ARCC, will merge with and into MFIC, with MFIC surviving as a wholly-owned subsidiary of ARCC. Immediately after that step, MFIC will merge with and into Union Acquisition Sub LLC, a Delaware limited liability company and also a wholly-owned subsidiary of ARCC, which will be the surviving company. Both the MFIC Board, acting on a special committee recommendation, and the ARCC Board have approved and declared advisable the Merger Agreement, the filing states.

The filing explains that the Exchange Ratio used to calculate the stock portion of the consideration will be set no earlier than 48 hours before the effective time of the First Merger, based on ARCC's net asset value per share and the closing price of ARCC Common Stock at that time. Three pricing tiers govern the calculation: if ARCC's stock trades at or below 100% of its net asset value, at greater than 100% but no more than 104.5% of net asset value, or above 104.5% of net asset value, each scenario yielding a different formula, as described in the filing. The stock component of the consideration is also subject to reduction by any Post-Signing Tax Dividend Amount, defined as the aggregate per share amount of Tax Dividends declared after signing with a record date on or before closing, excluding regular quarterly dividends.

The filing lists several conditions to closing, including MFIC stockholder approval, NASDAQ listing approval for the ARCC shares to be issued, effectiveness of ARCC's registration statement on Form N-14, and expiration or termination of the applicable waiting period under the HSR Act. MFIC has agreed to a non-solicitation covenant but retains the right, prior to receiving stockholder approval, to terminate the Merger Agreement to accept a Superior Proposal, subject to compliance with the non-solicitation covenant terms described in the filing.

What Was Disclosed

Ares Capital Corporation disclosed entry into a merger agreement to acquire MidCap Financial Investment Corporation through a two-step merger, with MFIC shareholders to receive $10.88 per fully diluted share, consisting of $1.21 in cash and approximately $9.67 in ARCC Common Stock, subject to adjustment.