Ares Capital Corporation filed a Form 8-K on October 27, 2026, disclosing that it entered into an Agreement and Plan of Merger with MidCap Financial Investment Corporation on October 26, 2026, under which ARCC would acquire MFIC in a cash-and-stock transaction valued at $10.88 per fully diluted share of MFIC common stock as of the date of the Merger Agreement.

Key Highlights

  • Total consideration: The filing states 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, Ares Capital Management LLC.
  • Stock component: The remaining approximately $9.67 per share will be paid in ARCC Common Stock, subject to reduction for the Post-Signing Tax Dividend Amount and adjustment per the Exchange Ratio formula.
  • Voting support secured: Certain MFIC stockholders who collectively own more than 5% of MFIC's outstanding common stock have entered into voting and support agreements in favor of the Mergers.
  • No ARCC stockholder vote required: According to the filing, no vote of ARCC stockholders is required in connection with the transactions.
  • Tax treatment intended: 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.
  • Key conditions: Closing requires MFIC stockholder approval of at least a majority of outstanding shares, NASDAQ listing approval for ARCC shares to be issued, effectiveness of ARCC's Form N-14 registration statement, and HSR Act waiting period expiration or termination.

Ares Capital's Two-Step Merger Structure and Exchange Ratio Mechanics

According to the filing, the transaction is structured as a two-step merger. In the First Merger, Acquisition Sub 1 - a wholly-owned Maryland corporation subsidiary of ARCC - will merge with and into MFIC, with MFIC surviving as a wholly-owned subsidiary of ARCC. In the Second Merger, that surviving corporation will merge with and into Acquisition Sub 2, a wholly-owned Delaware limited liability company subsidiary of ARCC, which will become the surviving company. Both the MFIC Board, at the recommendation of its special committee, and the ARCC Board have approved and declared advisable the Merger Agreement and the transactions.

The filing describes a variable Exchange Ratio for the stock portion of the consideration, to be set no earlier than 48 hours before closing based on ARCC's net asset value per share and the closing price of ARCC Common Stock at that time. The filing sets out three scenarios: if the ARCC price is at or below 100% of ARCC NAV, the ratio is fixed by dividing $9.67 (less the Post-Signing Tax Dividend Amount) by ARCC NAV; if the ARCC price is above 100% but at or below 104.5% of NAV, the ratio blends a 50% premium participation; and if the ARCC price exceeds 104.5% of NAV, the numerator is capped at 102.25% of $9.67 less the Post-Signing Tax Dividend Amount, divided by the ARCC price.

The filing also notes that prior to closing, MFIC will declare one or more Tax Dividends to distribute undistributed investment company taxable income and maintain its regulated investment company status. Any such Tax Dividend declared after signing - excluding regular quarterly dividends - will reduce the stock portion of the Merger Consideration. MFIC is restricted from soliciting competing acquisition proposals, subject to customary exceptions, and the filing indicates ARCC and MFIC each hold certain termination rights, including MFIC's ability to terminate to pursue a Superior Proposal subject to specified conditions and payment obligations.

What Was Disclosed

Ares Capital Corporation (NASDAQ:ARCC) disclosed entry into a Merger Agreement to acquire MidCap Financial Investment Corporation in a cash-and-stock transaction, with each MFIC share to receive $1.21 in cash plus ARCC stock, representing total consideration of $10.88 per fully diluted MFIC share as of October 26, 2026.