Ares Capital Corporation to Buy Allied Capital Corp.

October 26, 2009

Ares Capital Corporation and Allied Capital Corporation have entered into an agreement under which Ares Capital will acquire Allied Capital in an all stock transaction.

In a press release dated October 26, 2009, Ares Capital Corporation (“Ares Capital”) (NASDAQ: ARCC) and business development company, Allied Capital Corporation (“Allied Capital”) (NYSE: ALD), announced that they have entered into an agreement under which Ares Capital will acquire Allied Capital in a stock swap worth approximately $648 million, or $3.47 per Allied Capital share.  Under the deal terms, Allied Capital stockholders will receive 0.325 Ares Capital shares for each Allied Capital share, which represents a 27.3% premium to Allied Capital’s closing stock price on October 23, 2009.  As a result of the transaction, Ares Capital will issue approximately 58.3 million shares in exchange for approximately 179.4 million outstanding Allied Capital shares.  Upon completion of the transaction, Ares Capital stockholders will own approximately 65% of the combined company and Allied Capital stockholders will own approximately 35%.  Both of Ares and Allied are in the business of making debt and equity capital investments in middle-market businesses.  The combined company, as of June 30, 2009, had a pro forma investment portfolio valued at $4.5 billion.  The transaction is expected to close by the end of the first quarter of 2010, subject to stockholder approvals, customary regulatory approvals, certain lender consents and other closing conditions. 

In a separate transaction, Ares Capital announced it has reached an agreement to acquire Allied Capital’s interest in its Senior Secured Loan Fund LLC (“SL Fund”) for $165 million in cash.  Launched in 2007, the SL Fund invests in “unitranche” securities of middle-market companies.  The SL Fund has approximately $3.6 billion of committed capital and holds approximately $900 million in unitranche loans.  The transaction is expected to close at the end of October, subject to the satisfaction of customary closing conditions.  

To view the Press Release, please click here.


Categories

Investment Manager M&A, Private Equity M&A, Transactions