Ares's $2.6B MidCap Buy at 15% Discount to NAV Could Ignite BDC Consolidation Wave
ARCC is trading near its 52-week low of $17.4 (7.0% above the low).
Summary
Ares is paying $2.6 billion including debt for MidCap Financial, run by an Apollo affiliate, at $10.88 a share — mostly Ares stock and a 30% premium to MidCap's $8.37 Monday close. Even with that premium, Ares gets MidCap at a 15% discount to its Sept. 30 NAV of about $12.86 a share, a split-the-difference structure Barron's flags as a possible template for other deals. The read-through matters because the median BDC trades near a 35% discount to NAV, and most BDCs have market values under $1 billion, so consolidation or take-privates become plausible. MidCap shares jumped 23% to $10.29 while Ares edged up 0.2% to $18.65, and the VanEck BDC Income ETF rose 1.5% to $12.08. This lands the same morning Ares reported Q3 core EPS of $0.46 against a $0.48 dividend, with NAV at $19.31 and non-accruals at 2.4% of amortized cost — the deal is being pitched as a growth offset to a softer credit backdrop.
At the time of this announcement, ARCC was trading at $18.62 on NASDAQ in the Finance sector, with a market capitalization of approximately $13.4B. The 52-week trading range was $17.40 to $21.14. This news item was assessed with positive market sentiment and an importance score of 7 out of 10. Source: Dow Jones Newswires.