Ares Capital’s $2.6 Billion MidCap Deal Cancels Earnings Call
Key Facts
MidCap Financial Investment Corporation said on October 30 that it would not hold its third-quarter earnings call and webcast, scheduled for November 5 at 8:30 a.m. Eastern time. The announcement came in light of the definitive merger agreement with Ares Capital, which was unanimously approved by the boards of both companies. The transaction has an implied value of about $2.6 billion and is structured as a mix of stock and cash. The company did not identify the agreement in its cancellation announcement as the “direct cause” of its decision, and canceling the call does not in itself mean the earnings release has been canceled. Ares Capital had said it expects MidCap to report third-quarter results on November 5.
Under the announced terms, MidCap shareholders are expected to receive $10.88 per fully diluted share at closing. The consideration consists of about $1.21 in cash and $9.67 in Ares Capital shares, before an adjustment to the stock component tied to the special distribution. The announced value represents a premium of about 30.1% to MidCap’s closing share price on October 26, the day before the agreement was announced, and a premium of 25.8% to its 30-day volume-weighted average price through that date. The comparison shows the two pricing benchmarks the companies used to measure the consideration, while the final share amount remains subject to the agreed adjustment mechanism. Ares said the stock component will be reduced dollar for dollar to account for the special distribution that will precede closing.
The special distribution is intended to pay out MidCap’s remaining undistributed taxable income before the deal closes. Under the agreement’s mechanism, the value of the distribution is matched by an equivalent reduction in the Ares Capital stock component, so the final share count depends on the distribution’s value and Ares’ share price under the specified terms. MidCap initially estimated its net asset value at $12.86 per share on September 30, with the final figure to be reported in its third-quarter results. That estimate provides a financial benchmark from before the agreement was announced, but does not replace the consideration specified for shareholders in the deal. MidCap shares closed at $10.40 and Ares Capital shares at $19.12 on October 29, according to EL7 data; those closing prices alone do not establish that the moves were a response to the call’s cancellation or explain the deal’s rationale.
Following the deal announcement on October 27, Reuters reported that MidCap shares jumped more than 24%, amid discussion of a possible broadening of consolidation among publicly traded private credit funds. The coverage said BlackRock TCP Capital, Investcorp Credit Management BDC and WhiteHorse Finance had said they were evaluating strategic options. In an initial report on premarket trading that day, Reuters said Ares Capital shares fell 2.4% while MidCap shares rose 18%. The figures differ depending on the observation time: one refers to premarket trading, while the other describes a gain of more than 24% alongside the deal announcement. The October 29 closing prices represent levels for that day only and do not attribute any particular move to the cancellation of the earnings call.
Ares Capital says the deal would increase the combined company’s portfolio to more than 800 portfolio companies, with investments exceeding $31 billion at fair value, based on September 30, 2026 data. Under its estimates, current Ares shareholders would own about 95% of the combined company, compared with about 5% for MidCap shareholders, before accounting for the effect of the special distribution. Wells Fargo has also agreed, subject to customary conditions, to provide an additional $750 million in secured financing that could be used to support the deal. Ares says the deal is expected to modestly increase its core earnings per share and support future distributions; these are company projections, not realized results. Together, these elements link portfolio expansion and new financing with the expected change in ownership of the combined company.
The companies are targeting completion in the first half of 2027, subject to approval by MidCap shareholders, regulatory approvals and other customary closing conditions. Ares’ announced next steps include filing a Form N-14 registration statement with the Securities and Exchange Commission, containing a proxy statement for MidCap shareholders and a prospectus for Ares, and then sending it to MidCap shareholders. Shareholder approval and regulatory procedures remain conditions to closing, while the targeted period is an expected timeframe, not a confirmed completion date. Ares expects to announce third-quarter financial results on November 5, the date originally set for MidCap’s canceled call. The results release therefore remains expected on the same date under Ares’ statement, while the call intended to discuss them will not be held.