Ares Capital To Buy American Capital, Excl. Mortgage Unit, For $3.4 Bln

(RTTNews) - Ares Capital Corp. (ARCC) and American Capital, Ltd. (ACAS) announced Monday that they have entered into a definitive merger agreement under which Ares Capital will acquire American Capital, excluding American Capital Mortgage Management, LLC. Under the terms of the deal, American Capital shareholders will receive approximately $3.43 billion in total cash and stock consideration or $14.95 per share.

In a separate transaction, American Capital also announced that it is selling American Capital Mortgage to American Capital Agency Corp. (AGNC) for $562 million or $2.45 per share.

Collectively, the transactions announced represent total value for American Capital shareholders of $4.0 billion or approximately $17.40 per share. The price represents a premium of 11.4% to American Capital's closing price on May 20, and a premium of 21.6% to American Capital's unaffected closing price on November 13, 2015.

American Capital shareholders will receive $1.470 billion in cash from Ares Capital, or $6.41 per share, plus 0.483 Ares Capital shares for each American Capital share. This will result in approximately 110.8 million Ares Capital shares, or $1.682 billion in value or $7.34 per share.

Following the transaction, Ares Capital shareholders are expected to own approximately 73.9% and American Capital shareholders are expected to own approximately 26.1% of the combined company.

Ares noted that the combined company would have on a pro forma basis more than $13 billion of investments at fair value as of March 31, 2016. The Boards of Directors of both companies have unanimously approved the transaction.

The combined company will remain externally managed by Ares Capital Management LLC and all current Ares Capital officers and directors will remain in their current roles.