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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported)
October
26, 2026
ARES CAPITAL CORPORATION
(Exact Name of Registrant as Specified in
Charter)
| Maryland |
|
814-00663 |
|
33-1089684 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
| 245 Park Avenue, 44th Floor, New York, NY |
|
10167 |
| (Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code (212) 750-7300
(Former Name or Former Address, if Changed
Since Last Report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
| x | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of
the Act:
| Title of each class |
|
Trading symbol |
|
Name of each exchange on which registered |
| Common stock, $0.001 par value |
|
ARCC |
|
NASDAQ Global Select Market |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ¨
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ¨
| Item 1.01. |
Entry into a Material Definitive Agreement. |
Merger Agreement
On October 26, 2026,
Ares Capital Corporation, a Maryland corporation (“ARCC”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), Union Acquisition Sub Inc.,
a Maryland corporation and a wholly-owned subsidiary of ARCC (“Acquisition Sub 1”), Union Acquisition Sub LLC, a Delaware
limited liability company and a wholly-owned subsidiary of ARCC (“Acquisition Sub 2”), and, solely for the limited
purposes set forth therein, Ares Capital Management LLC, a Delaware limited liability company and ARCC’s investment adviser (“ARCC
Adviser”).
The Merger Agreement provides
that, subject to the terms and conditions set forth therein, (i) Acquisition Sub 1 will merge with and into MFIC (the “First
Merger”), with MFIC continuing as the surviving corporation and as a wholly-owned subsidiary of ARCC (the “Surviving Corporation”),
and (ii) after the First Merger, the Surviving Corporation will merge with and into Acquisition Sub 2 (the “Second Merger”
and, together with the First Merger, the “Mergers”), with Acquisition Sub 2 continuing as the surviving company and as a wholly-owned
subsidiary of ARCC (the “Surviving Company”).
The board of directors
of MFIC (the “MFIC Board”), at the recommendation of the special committee of MFIC, and the board of directors of ARCC
(the “ARCC Board”) have approved, adopted and declared advisable the Merger Agreement and the transactions contemplated
thereby (collectively, the “Transaction”). Holders of MFIC common stock, par value $0.001 per share (“MFIC Common
Stock”) will not be entitled to appraisal or objecting stockholder rights in connection with the Mergers. In addition, as
described below, concurrently with the execution of the Merger Agreement, certain stockholders of MFIC who collectively own more
than 5% of MFIC’s outstanding common stock entered into voting and support agreements with ARCC pursuant to which they agreed,
subject to the terms and conditions set forth therein, to vote their shares of MFIC Common Stock in favor of the approval and adoption of the Merger Agreement and the Mergers.
Merger Consideration
Subject to the terms and
conditions of the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), each share of MFIC Common
Stock issued and outstanding immediately prior to the Effective Time (other than shares held by a subsidiary of MFIC or held, directly
or indirectly, by ARCC or Acquisition Sub 1) will be converted into the right to receive (i) $1.21 in cash, without interest, to be paid
by ARCC Adviser (the “Cash Consideration”), and (ii) a number of validly issued, fully paid and non-assessable shares of ARCC
common stock, par value $0.001 per share (“ARCC Common Stock”) equal to the Exchange Ratio (as defined below), with cash to
be paid in lieu of fractional shares, if applicable (together with the Cash Consideration, the “Merger Consideration”). Based
on the terms of the Merger Agreement, as of the date of the Merger Agreement, the Merger Consideration represents total consideration
of $10.88 per fully diluted share of MFIC Common Stock, consisting of approximately $1.21 per share in cash, to be paid by ARCC Adviser,
and approximately $9.67 per share in ARCC Common Stock, subject to reduction for the Post-Signing Tax Dividend Amount (as defined below)
and to adjustment as described below.
The “Exchange Ratio”
will be determined as of a date mutually agreed by the parties that is no earlier than 48 hours (excluding Sundays and holidays) prior
to the Effective Time, based on ARCC’s net asset value per share (“ARCC NAV”) and the closing price of ARCC Common Stock
on that date (the “ARCC Price”), as follows:
(1) if the ARCC Price is less than or equal to 100% of ARCC NAV, the Exchange
Ratio will equal $9.67 less the Post-Signing Tax Dividend Amount, divided by ARCC NAV;
(2) if the ARCC Price is greater than 100%
but less than or equal to 104.5% of ARCC NAV, the Exchange Ratio will equal the product of (A) $9.67 less the Post-Signing Tax Dividend
Amount and (B) 1.00 plus 50% of the premium of the ARCC Price to ARCC NAV, divided by the ARCC Price; and
(3) if the ARCC Price
is greater than 104.5% of ARCC NAV, the Exchange Ratio will equal the product of (A) $9.67 less the Post-Signing Tax Dividend Amount
and (B) 102.25%, divided by the ARCC Price.
Tax Distributions
For U.S. federal income tax
purposes, 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 (the “Code”).
Prior to the closing of the
Mergers, MFIC will declare one or more dividends in order to distribute all of its previously undistributed investment company taxable
income, any prior year shortfall and net capital gain and to maintain its qualification as a “regulated investment company”
under the Code (any such dividend, a “Tax Dividend”). The stock portion of the Merger Consideration will be reduced by the
aggregate per share amount of any Tax Dividend declared after the date of the Merger Agreement with a record date on or prior to the closing
date, excluding regular quarterly dividends (the “Post-Signing Tax Dividend Amount”).
Representations, Warranties and Covenants
The Merger Agreement contains
customary representations and warranties of MFIC, ARCC, Acquisition Sub 1, Acquisition Sub 2 and ARCC Adviser, which will not survive
consummation of the Mergers, subject to certain limited exceptions described in the Merger Agreement.
The Merger Agreement also
contains certain pre-closing covenants by the parties, including covenants requiring (i) MFIC, ARCC, Acquisition Sub 1 and Acquisition
Sub 2 to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (ii) MFIC to
use reasonable best efforts to conduct its business in the ordinary course, and (iii) MFIC and ARCC to refrain from taking certain
actions prior to the consummation of the Mergers without the other party’s consent. Among other things, MFIC has also agreed not
to, and to cause its subsidiaries and representatives not to, solicit or initiate discussions or negotiations with third parties regarding
other proposals to acquire MFIC, and MFIC is restricted in its ability to respond to such proposals, subject to customary exceptions.
MFIC must call and hold a meeting of MFIC stockholders solely for the purpose of seeking the approval of the Mergers by the holders of
at least a majority of the outstanding shares of MFIC Common Stock entitled to vote thereon (such approval, the “MFIC Stockholder
Approval” and such meeting, the “MFIC Stockholders Meeting”). No vote of ARCC stockholders is required in connection
with the transactions contemplated by the Merger Agreement.
Conditions to the Mergers
The consummation of the Mergers
is subject to the satisfaction or waiver of certain customary closing conditions, including obtaining the MFIC Stockholder Approval, the
approval for listing on NASDAQ of the ARCC Common Stock to be issued in the First Merger, the effectiveness of ARCC’s registration
statement on Form N-14, the expiration or termination of the applicable waiting period under the HSR Act and the absence of any law
or order prohibiting the consummation of the First Merger. ARCC’s obligation to consummate the Mergers is further conditioned upon
the receipt of certain third party consents.
The Merger Agreement contains
certain termination rights for ARCC and MFIC. In particular, at any time prior to receipt of the MFIC Stockholder Approval, MFIC may terminate
the Merger Agreement in order to substantially concurrently enter into a definitive agreement providing for a Superior Proposal (as defined
in the Merger Agreement), subject to MFIC’s compliance with certain obligations contained in its non-solicitation covenants and
the payment by MFIC of a $31,360,000 termination fee (the “MFIC Termination Fee”). The MFIC Termination Fee is also payable
by MFIC in certain other situations, including a termination of the Merger Agreement following withdrawal or modification of the recommendation
by the MFIC Board that the stockholders of MFIC vote in favor of the approval of the Mergers (a “MFIC Recommendation Change”).
No termination fee is payable by ARCC in connection with the termination of the Merger Agreement.
Voting Agreements
Concurrently with ARCC entering
into the Merger Agreement, ARCC also entered into separate voting and support agreements (each, a “Voting Agreement”) with
Apollo Principal Holdings A, L.P. and MidCap Financial Trust, each an affiliate of Apollo Global Management, Inc. (each, an “Equityholder”),
with respect to an aggregate of 4,281,394 shares of MFIC Common Stock (together with any shares of MFIC Common Stock that an Equityholder
acquires beneficial ownership of prior to the expiration of the Voting Agreement, the “Voting Agreement Shares”). Pursuant
to the Voting Agreements, each Equityholder has agreed, among other things, (i) to vote or cause to be voted its Voting Agreement Shares
at any meeting of MFIC stockholders in favor of the approval of the Mergers and any other matters expressly contemplated by the Merger
Agreement that are submitted to MFIC stockholders and are necessary for the consummation of the Mergers, and any proposal to adjourn or
postpone such meeting if there are not sufficient votes to approve the Mergers, (ii) not to transfer any of its Voting Agreement Shares,
subject to certain permitted transfers and (iii) not to take certain actions that would violate the “no-shop” provisions of
the Merger Agreement if the Equityholder were MFIC. Each Voting Agreement will terminate upon the earliest of (a) the Effective Time,
(b) any amendment, modification or waiver of the Merger Agreement made without the applicable Equityholder’s consent that decreases
the merger consideration, changes its form or otherwise materially adversely affects the applicable Equityholder (in its capacity as a
stockholder of MFIC) or the economic interests of MFIC stockholders, (c) the valid termination of the Merger Agreement, (d) a MFIC Recommendation
Change and (e) the mutual written consent of the parties thereto.
General
The foregoing summary descriptions of the Merger
Agreement and the Voting Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of
the Merger Agreement and the form of Voting Agreement, copies of which are attached to this Current Report on Form 8-K (this “Current
Report”) as Exhibits 2.1 and 10.1, respectively, and the terms of which are incorporated herein by reference.
The Merger Agreement has been attached as an exhibit
to this Current Report in order to provide investors and security holders with information regarding its terms. It is not intended to
provide any other financial information about the parties thereto or their respective subsidiaries and affiliates. The Merger Agreement
contains representations, warranties, covenants and agreements that were made only for purposes of the Merger Agreement and as of specific
dates; were solely for the benefit of the parties to the Merger Agreement (except as may be expressly set forth in the Merger Agreement);
may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes
of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and may be
subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors and
security holders should not rely on such representations, warranties, covenants or agreements, or any descriptions thereof, as characterizations
of the actual state of facts or condition of any of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of the representations, warranties, covenants and agreements may change after the
date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the parties to the
Merger Agreement.
| Item 7.01. |
Regulation FD Disclosure. |
On October 27, 2026, ARCC
and MFIC issued a joint press release announcing the signing of the Merger Agreement. A copy of the press release is included as
Exhibit 99.1 to this Current Report.
The information furnished pursuant to this Item
7.01, including the related exhibit, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information or exhibits
be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or
the Exchange Act, except as shall be expressly set forth by specific reference in such a filing by ARCC with the U.S. Securities and Exchange
Commission (the “SEC”).
| Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits:
Exhibit
Number |
|
Description |
| 2.1 |
|
Agreement
and Plan of Merger, dated as of October 26, 2026, by and among Ares Capital Corporation, Union Acquisition Sub Inc., Union Acquisition
Sub LLC, MidCap Financial Investment Corporation and, solely for the limited purposes set forth therein, Ares Capital Management LLC |
| |
|
|
| 10.1 |
|
Form of
Voting and Support Agreement, dated as of October 26, 2026, by and between Ares Capital Corporation and each of the Equityholders
party thereto |
| |
|
|
| 99.1 |
|
Joint
Press Release dated October 27, 2026 |
| |
|
|
| 104 |
|
Cover Page Interactive Data File (embedded within Inline XBRL Document) |
***********
Forward-Looking Statements
Some of the statements in this Current Report
constitute forward-looking statements because they relate to future events, future performance or financial condition, including statements
regarding the Transaction pursuant to the Merger Agreement. The forward-looking statements may include statements as to: the consummation
of the Transaction, the future operating results of ARCC, MFIC and, following the closing of the Transaction, the combined company, and
distribution projections; business prospects of ARCC, MFIC and the combined company, and the prospects of their portfolio companies; and
the impact of the investments that ARCC, MFIC and the combined company expect to make. In addition, words such as “anticipate,”
“believe,” “expect,” “seek,” “plan,” “should,” “could,” “estimate,”
“overestimate,” “underestimate,” “project,” “intend,” “may,” “will,”
“endeavor,” “potential,” “predict,” “continue,” “target” and “would”
indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained
in this communication involve risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking
statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will
be achieved. Certain factors could cause actual results and conditions to differ materially from those planned, projected, or estimated,
including the uncertainties associated with (i) the ability of the parties to consummate the Transaction on the expected timeline,
or at all; (ii) the failure of MFIC stockholders to approve the Transaction and the other Proposals (as defined below); (iii) the
possibility that any or all of the various conditions to the consummation of the Transaction, including the receipt of any required regulatory
approvals, may not be satisfied or waived on a timely basis or at all, and including the possibility that a governmental entity may prohibit,
delay or refuse to grant approval for the consummation of the Transaction or may require conditions, limitations or restrictions in connection
with such approvals; (iv) the occurrence of any event, change or other circumstance that could give rise to the termination
of the Merger Agreement, including circumstances requiring MFIC to pay a termination fee; (v) the possibility that competing offers
or acquisition proposals for MFIC will be made; (vi) ARCC’s ability to realize the anticipated benefits of the Transaction,
including the expected accretion to ARCC’s core earnings, including as a result of delay in completing the Transaction or integrating
the businesses of MFIC and ARCC; (vii) the amount of the special dividend from MFIC’s undistributed taxable income, the NAV
per share of ARCC and the trading price of ARCC common stock, each of which will affect the number of shares of ARCC common stock issued
in the Transaction; (viii) risks related to diverting management’s attention from ongoing business operations and the effect
of the announcement or pendency of the Transaction on the business relationships, operating results and business generally of ARCC and
MFIC; (ix) the combined company’s plans, expectations, objectives and intentions as a result of the Transaction, including
the integration of MFIC’s portfolio; (x) the future operating results and net investment income projections of ARCC, MFIC or,
following the closing of the Transaction, the combined company; (xi) the ability of Ares Management to implement its future plans
with respect to the combined company and to attract and retain highly talented professionals; (xii) the business prospects of ARCC,
MFIC or the combined company and the ability of their portfolio companies to achieve their objectives; (xiii) the expected financings
and investments and additional leverage that ARCC, MFIC or the combined company may seek to incur in the future; (xiv) the adequacy
of the cash resources and working capital of ARCC, MFIC or the combined company; (xv) the timing of cash flows, if any, from the
operations of the portfolio companies of ARCC, MFIC or the combined company; (xvi) the ability of ARCC and the combined company to
maintain their qualification as a business development company under the Investment Company Act of 1940, as amended, and as a regulated investment company under Subchapter
M of the Code; (xvii) general economic, political and market conditions, including changes in
interest rates and credit spreads; (xviii) future changes in laws or regulations (including the interpretation of these laws and
regulations by regulatory authorities); (xix) the risk that stockholder litigation in connection with the Transaction may result
in significant costs of defense and liability; (xx) unexpected costs, charges or expenses resulting from the Transaction, and (xxi) such
other factors as are described under the heading “Risk Factors” in ARCC’s and MFIC’s respective annual reports
on Form 10-K, quarterly reports on Form 10-Q and other filings with the SEC. Any forward-looking statements speak only as of
the date of this Current Report. ARCC and MFIC have based the forward-looking statements included in this Current Report on information
available to them on the date hereof, and they assume no obligation to update any such forward-looking statements. Although ARCC and MFIC
undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise,
you are advised to consult any additional disclosures that they may make directly to you or through reports that ARCC and/or MFIC in the
future may file with the SEC, including the Proxy Statement/Prospectus and the Registration Statement (in each case, as defined below),
annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Readers are cautioned not
to place undue reliance on any of these forward-looking statements.
No Offer or Solicitation
This Current Report is not, and under no circumstances
is it to be construed as, a prospectus or an advertisement and the communication of this Current Report is not, and under no circumstances
is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in ARCC, MFIC or in any fund or other
investment vehicle managed by Ares Management, Apollo Management or any of their respective affiliates.
Additional Information and Where to Find It
This Current Report relates to the proposed Transaction
and certain related matters (the “Proposals”). In connection with the Proposals, ARCC will file with the SEC a registration
statement on Form N-14 (the “Registration Statement”) that will include a proxy statement of MFIC and a prospectus of
ARCC (the “Proxy Statement/Prospectus”), and MFIC will mail the Proxy Statement/Prospectus to its stockholders. The Proxy
Statement/Prospectus and the Registration Statement will each contain important information about ARCC, MFIC, the Transaction and the
Proposals. This Current Report does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation
of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10
of the Securities Act. INVESTORS IN ARCC AND STOCKHOLDERS OF MFIC ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND REGISTRATION
STATEMENT, AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ARCC, MFIC, THE TRANSACTION
AND THE PROPOSALS. Investors and security holders will be able to obtain the documents filed with the SEC free of charge at the
SEC’s website, http://www.sec.gov or, for documents filed by ARCC, from ARCC’s website at www.arescapitalcorp.com, and, for
documents filed by MFIC, from MFIC’s website at https://www.midcapfinancialic.com.
Participants in the Solicitation
ARCC, its directors, certain of its executive
officers and certain employees and officers of Ares Management and its affiliates may be deemed to be participants in the solicitation
of proxies in connection with the Proposals. Information about the directors and executive officers of ARCC is set forth in its proxy
statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on March 5, 2026. MFIC, its directors, certain
of its executive officers and certain employees and officers of Apollo Management and its affiliates may be deemed to be participants
in the solicitation of proxies in connection with the Proposals. Information about the directors and executive officers of MFIC is set
forth in its proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on April 30, 2026. Information
regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the MFIC stockholders
in connection with the Proposals, including a description of their direct or indirect interests, by security holdings or otherwise, will
be contained in the Proxy Statement/Prospectus when it becomes available. These documents may be obtained free of charge from the sources
indicated above.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
ARES CAPITAL CORPORATION |
| Date: October 27, 2026 |
|
|
| |
By: |
/s/ Scott C. Lem |
| |
Name: |
Scott C. Lem |
| |
Title: |
Chief Financial Officer and Treasurer |
Exhibit 99.1
Ares Capital Corporation Agrees to Acquire MidCap
Financial Investment Corporation
Transaction Expected to Be Accretive to Ares
Capital’s Core Earnings and
Support Future Dividends
Enhances Scale, Diversification and Market Presence
to Further Strengthen Ares Capital’s Position as the Largest Publicly Traded BDC and Ares Management’s Leading U.S. Direct
Lending Platform
Purchase Price Represents a 30.1% Premium to
MFIC’s Last Closing Price and a 25.8% Premium to MFIC’s 30-Day VWAP
NEW YORK – October 27, 2026 –
Ares Capital Corporation (NASDAQ: ARCC) (“Ares Capital”) and MidCap Financial Investment Corporation (NASDAQ: MFIC) (“MFIC”)
announced today that they have entered into a definitive merger agreement under which Ares Capital will acquire MFIC in a stock-and-cash
transaction for a total enterprise value of approximately $2.6 billion (the “Transaction”). The Transaction is expected to
further strengthen Ares Capital’s position as the largest publicly traded business development company (“BDC”) and Ares
Management Corporation’s (NYSE: ARES) (“Ares Management”) broader position as a leading direct lending platform to U.S.
middle-market companies. The Transaction has been unanimously approved by the Board of Directors of Ares Capital and the Board of Directors
of MFIC, which did so on the unanimous recommendation of the Special Committee of MFIC independent directors.
Under the terms of the Transaction, MFIC stockholders
are expected to receive total consideration of $10.88 per fully diluted share of MFIC common stock, consisting of approximately $1.21
per share in cash, provided by a subsidiary of Ares Management, and approximately $9.67 per share in Ares Capital common stock, as adjusted
for the cash received from MFIC’s special dividend described below. Prior to closing, MFIC expects to declare and pay a special
dividend to distribute to its stockholders all of its undistributed taxable income estimated to remain as of the closing of the Transaction,
which is expected to be meaningful. The Ares Capital stock consideration will be reduced dollar-for-dollar to account for the special
dividend, and the number of shares will be calculated based on an exchange ratio using a value for the Ares Capital common stock equal
to the greater of (i) Ares Capital’s NAV per share prior to closing and (ii) Ares Capital’s share price. In addition, MFIC
stockholders will share in 50% of any premium of Ares Capital’s share price in excess of NAV, up to 104.5% of NAV, which represents
a maximum of 102.25% of NAV.
The consideration of $10.88 per MFIC share represents
a premium of approximately 30.1% to MFIC’s closing share price on October 26, 2026, the last trading day prior to the announcement
of the Transaction, and a premium of approximately 25.8% to MFIC’s 30-day volume-weighted average share price for the period ending
October 26, 2026. MFIC’s preliminary estimate of net asset value per share as of September 30, 2026, is approximately $12.86.1
1 MFIC’s final net asset value per share as of September
30, 2026, will be reported in MFIC’s third quarter 2026 results, which MFIC expects to release on Thursday, November 5, 2026, and
may differ from this preliminary estimate. The preliminary estimate provided herein has been prepared by, and is the responsibility of,
MFIC's management. This estimate is based solely on MFIC management's preliminary determinations and has not been approved by the Board
of Directors of MFIC. Consequently, the data set forth in MFIC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2026,
may differ from this estimate, and any such differences may be material. Deloitte & Touche LLP, MFIC's independent registered public
accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to this preliminary estimate.
Financially Attractive Combination with Significant
Strategic Benefits
Ares Capital believes the Transaction will create
compelling benefits for stockholders:
| · | Accretive to earnings and supports future dividends. The Transaction is expected to be modestly
accretive to Ares Capital’s core earnings per share, further supporting future dividends. The combined company and its affiliates
expect to benefit from MFIC’s portfolio of senior secured investments with compelling current yields. |
| · | Greater scale and diversification. The addition of MFIC’s healthy and broad-based assets
will further diversify Ares Capital’s portfolio across borrowers, industries and sponsors. At closing, the Transaction is expected
to increase Ares Capital’s pro forma portfolio to more than 800 portfolio companies and over $31 billion of investments at fair
value as of September 30, 2026. |
| · | Broader sponsor and market connectivity. MFIC’s portfolio is expected to add more than 200
incumbent positions and further expand the number of sponsors Ares Capital has transacted with to more than 600. These relationships are
expected to enhance Ares Capital’s long-standing core middle-market presence and to support future investment opportunities, resulting
in greater financial resilience and strengthening its ability to grow through dynamic market environments. |
| · | Continued industry leadership. The Transaction builds on Ares Capital’s nearly two-decade
track record of successful strategic activity, including its prior acquisitions of Allied Capital Corporation and American Capital, Ltd.,
which has been an important contributor to its long-term growth and value creation. |
“We’re excited to announce our acquisition
of MFIC, which we believe reinforces our leading competitive position, advances our strategic goals and enhances the earnings power of
our company,” said Kort Schnabel, Chief Executive Officer of Ares Capital. “The MFIC transaction brings a diversified portfolio
and valuable borrower and sponsor relationships, which, when combined with our differentiated private credit investment capabilities,
we expect will bolster the long-term growth profile of Ares Capital. In addition, we believe this transaction will further build on our
successful track record of acquiring publicly traded BDCs and supporting attractive risk-adjusted returns over time.”
“We believe the financial merits of this
transaction are compelling,” said Scott Lem, Chief Financial Officer and Treasurer of Ares Capital. “We expect the transaction
to be accretive to core earnings and supportive of our future dividends, while preserving the balance sheet strength and financial flexibility
that have been central to Ares Capital’s long-term performance. Importantly, the financial support from Ares Management will provide
MFIC stockholders with additional cash value alongside attractive equity in Ares Capital’s industry-leading business.”
“This agreement with Ares Capital represents
a value-maximizing transaction that we are pleased to deliver for MFIC stockholders,” said Tanner Powell, Executive Chairman and
Chief Executive Officer of MFIC. “It provides value meaningfully above MFIC’s current stock price and gives our stockholders
an investment in the largest publicly traded BDC, which has a history of creating stockholder value through successful acquisitions. MFIC’s
investment adviser and Board, upon recommendation of its Special Committee, have concluded that this transaction represents the best path
forward for MFIC’s stockholders.”
“Apollo has long been committed to delivering
positive outcomes wherever we manage investor capital,” said John Zito, Co-President of Apollo Asset Management. “Throughout
this year we have taken active steps to support stockholder value across our public vehicles, including through this transaction. Importantly,
Apollo will continue to invest in and grow our middle-market direct lending franchise, including through the MidCap Financial platform.”
Additional Transaction Details
Prior to the closing of the Transaction, MFIC
will operate its business in the ordinary course, subject to certain interim operating covenants set forth in the Agreement and Plan of
Merger among Ares Capital, MFIC and certain other parties thereto (the “Merger Agreement”).
In connection with the Transaction, Apollo Principal
Holdings A, L.P. and MidCap Financial Trust, each an affiliate of Apollo Management and which together beneficially own 5.2% of MFIC’s
outstanding common stock, have entered into voting and support agreements with Ares Capital.
As part of the Transaction, Ares Capital may issue
up to approximately 41 million shares of common stock to MFIC stockholders; however, it is expected that the total number of shares will
be lower due to an adjustment in the exchange ratio for the MFIC special dividend. Following completion of the Transaction, and without
taking into account the impact of the MFIC special dividend, existing Ares Capital stockholders are expected to own approximately 95%
and existing MFIC stockholders are expected to own approximately 5% of the combined company.
Wells Fargo has also agreed, subject to customary
conditions, to provide $750 million of additional secured financing that can be used to support the Transaction.
The Transaction is expected to close in the first
half of 2027, subject to approval of MFIC’s stockholders, applicable regulatory approvals and the satisfaction of other customary
closing conditions. Upon completion of the Transaction, Ares Capital will continue to be externally managed by Ares Capital Management
LLC, and the existing Ares Capital Board and management team are expected to remain in place.
Wells Fargo is serving as exclusive financial
advisor and Kirkland & Ellis LLP and Latham & Watkins LLP are serving as legal counsel to Ares Capital. Eversheds Sutherland (US)
LLP is serving as legal counsel to the independent directors of Ares Capital. Simpson Thacher & Bartlett LLP is serving as legal counsel
to MFIC. Moelis & Company LLC is serving as financial advisor and Willkie Farr & Gallagher LLP and Stradley Ronon Stevens &
Young, LLP are serving as legal counsel to MFIC’s Special Committee.
About Ares Capital Corporation
Founded in 2004, Ares Capital is a leading specialty
finance company focused on providing direct loans and other investments in private middle-market companies in the United States. Ares
Capital's objective is to source and invest in high-quality borrowers that need capital to achieve their business goals, which oftentimes
can lead to economic growth and employment. Ares Capital believes its loans and other investments in these companies can help generate
attractive levels of current income and potential capital appreciation for investors. Ares Capital, through its investment manager, utilizes
its extensive, direct origination capabilities and incumbent borrower relationships to source and underwrite predominantly senior secured
loans but also subordinated debt and equity investments. Ares Capital has elected to be regulated as a BDC and was the largest publicly
traded BDC by market capitalization as of September 30, 2026. Ares Capital is externally managed by a subsidiary of Ares Management Corporation
(NYSE: ARES), a publicly traded, leading global alternative investment manager. For more information about Ares Capital, visit www.arescapitalcorp.com.
About MidCap Financial Investment Corporation
MidCap Financial Investment Corporation (NASDAQ:
MFIC) is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development
company under the Investment Company Act of 1940, as amended (the “1940 Act”). For tax purposes, MFIC has elected to be treated
as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. MFIC is externally managed by
Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries, a high-growth global
alternative asset manager. MFIC’s investment objective is to generate current income and, to a lesser extent, long-term capital
appreciation. MFIC primarily invests in directly originated and privately negotiated first lien senior secured loans to privately held
U.S. middle-market companies, which MFIC generally defines as companies with less than $75 million in earnings before interest, taxes,
depreciation and amortization, as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and
other items. To a lesser extent, MFIC may invest in other types of securities including first lien unitranche, second lien senior secured,
unsecured, subordinated, and mezzanine loans, and equities in both private and public middle-market companies. For more information,
please visit www.midcapfinancialic.com.
Forward-Looking Statements
Some of the statements in this press release
constitute forward-looking statements because they relate to future events, future performance or financial condition, including
statements regarding the Transaction pursuant to the Merger Agreement. The forward-looking statements may include statements as to:
the consummation of the Transaction, the future operating results of Ares Capital, MFIC and, following the closing of the
Transaction, the combined company, and distribution projections; business prospects of Ares Capital, MFIC and the combined company,
and the prospects of their portfolio companies; and the impact of the investments that Ares Capital, MFIC and the combined company
expect to make. In addition, words such as “anticipate,” “believe,” “expect,”
“seek,” “plan,” “should,” “could,” “estimate,”
“overestimate,” “underestimate,” “project,” “intend,” “may,”
“will,” “endeavor,” “potential,” “predict,” “continue,”
“target” and “would” indicate forward-looking statements, although not all forward-looking statements
include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be
regarded as a representation that such plans, estimates or expectations will be achieved. Certain factors could cause actual results
and conditions to differ materially from those planned, projected, or estimated, including the uncertainties associated with (i) the
ability of the parties to consummate the Transaction on the expected timeline, or at all; (ii) the failure of MFIC stockholders to
approve the Transaction and the other Proposals (as defined below); (iii) the possibility that any or all of the various conditions
to the consummation of the Transaction, including the receipt of any required regulatory approvals, may not be satisfied or waived
on a timely basis or at all, and including the possibility that a governmental entity may prohibit, delay or refuse to grant
approval for the consummation of the Transaction or may require conditions, limitations or restrictions in connection with such
approvals ; (iv) the occurrence of any event, change or other circumstance that could give rise to the termination of the
Merger Agreement, including circumstances requiring MFIC to pay a termination fee; (v) the possibility that competing offers or
acquisition proposals for MFIC will be made; (vi) Ares Capital’s ability to realize the anticipated benefits of the
Transaction, including the expected accretion to Ares Capital’s core earnings and the expected elimination of certain expenses
and costs, including as a result of delay in completing the Transaction or integrating the businesses of MFIC and Ares Capital;
(vii) the amount of the special dividend from MFIC’s undistributed taxable income, the NAV per share of Ares Capital and the
trading price of Ares Capital common stock, each of which will affect the number of shares of Ares Capital common stock issued in
the Transaction; (viii) risks related to diverting management’s attention from ongoing business operations and the effect of
the announcement or pendency of the Transaction on the business relationships, operating results and business generally of Ares
Capital and MFIC; (ix) the combined company’s plans, expectations, objectives and intentions as a result of the Transaction,
including the integration of MFIC’s portfolio; (x) the future operating results and net investment income projections of Ares
Capital, MFIC or, following the closing of the Transaction, the combined company; (xi) the ability of Ares Management to implement
its future plans with respect to the combined company and to attract and retain highly talented professionals; (xii) the business
prospects of Ares Capital, MFIC or the combined company and the ability of their portfolio companies to achieve their objectives;
(xiii) the expected financings and investments and additional leverage that Ares Capital, MFIC or the combined company may seek to
incur in the future; (xiv) the adequacy of the cash resources and working capital of Ares Capital, MFIC or the combined company;
(xv) the timing of cash flows, if any, from the operations of the portfolio companies of Ares Capital, MFIC or the combined company;
(xvi) the ability of Ares Capital and the combined company to maintain their qualification as a business development company under
the 1940 Act, and as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended; (xvii)
general economic, political and market conditions, including changes in interest rates and credit spreads; (xviii) future changes in
laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (xix) the risk that
stockholder litigation in connection with the Transaction may result in significant costs of defense and liability; (xx) unexpected
costs, charges or expenses resulting from the Transaction, and (xxi) such other factors as are described under the heading
“Risk Factors” in Ares Capital’s and MFIC’s respective annual reports on Form 10-K, quarterly reports on
Form 10-Q and other filings with the Securities and Exchange Commission (“SEC”). Any forward-looking statements speak
only as of the date of this press release. Ares Capital and MFIC have based the forward-looking statements included in this press
release on information available to them on the date hereof, and they assume no obligation to update any such forward-looking
statements. Although Ares Capital and MFIC undertake no obligation to revise or update any forward-looking statements, whether as a
result of new information, future events or otherwise, you are advised to consult any additional disclosures that they may make
directly to you or through reports that Ares Capital and/or MFIC in the future may file with the SEC, including the Proxy
Statement/Prospectus and the Registration Statement (in each case, as defined below), annual reports on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K. Readers are cautioned not to place undue reliance on any of these forward-looking
statements.
No Offer or Solicitation
This press release is not, and under no circumstances
is it to be construed as, a prospectus or an advertisement and the communication of this press release is not, and under no circumstances
is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in Ares Capital, MFIC or in any fund
or other investment vehicle managed by Ares Management, Apollo Management or any of their respective affiliates.
Additional Information and Where to Find It
This press release relates to the proposed Transaction
and certain related matters (the “Proposals”). In connection with the Proposals, Ares Capital will file with the SEC a registration
statement on Form N-14 (the “Registration Statement”) that will include a proxy statement of MFIC and a prospectus of Ares
Capital (the “Proxy Statement/Prospectus”), and MFIC will mail the Proxy Statement/Prospectus to its stockholders. The Proxy
Statement/Prospectus and the Registration Statement will each contain important information about Ares Capital, MFIC, the Transaction
and the Proposals. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended. INVESTORS IN ARES CAPITAL AND STOCKHOLDERS OF MFIC ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT, AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT ARES CAPITAL, MFIC, THE TRANSACTION AND THE PROPOSALS. Investors and security holders will be able to obtain
the documents filed with the SEC free of charge at the SEC’s website, http://www.sec.gov or, for documents filed by Ares Capital,
from Ares Capital’s website at www.arescapitalcorp.com, and, for documents filed by MFIC, from MFIC’s website at https://www.midcapfinancialic.com.
Participants in the Solicitation
Ares Capital, its directors, certain of its executive
officers and certain employees and officers of Ares Management and its affiliates may be deemed to be participants in the solicitation
of proxies in connection with the Proposals. Information about the directors and executive officers of Ares Capital is set forth in its
proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on March 5, 2026. MFIC, its directors, certain
of its executive officers and certain employees and officers of Apollo Management and its affiliates may be deemed to be participants
in the solicitation of proxies in connection with the Proposals. Information about the directors and executive officers of MFIC is set
forth in its proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on April 30, 2026. Information
regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the MFIC stockholders in
connection with the Proposals, including a description of their direct or indirect interests, by security holdings or otherwise, will
be contained in the Proxy Statement/Prospectus when it becomes available. These documents may be obtained free of charge from the sources
indicated above.
Contacts
Ares
Investor Relations
John Stilmar | Carl Drake
+1.888.818.5298
irarcc@ares.com
Media
Priscila Roney | Jacob Silber
media@ares.com
MFIC
Investor Relations
Elizabeth Besen
+1.212.822.0625
ebesen@apollo.com
Apollo Global Management, Inc.
Media
Joanna Rose
Global Head of Corporate Communications
+1.212.822.0491
Communications@apollo.com
