By Lisa Kerner
Charlotte, N.C., Oct. 26 - Ares Capital Corp. agreed to acquire Allied Capital Corp. in an all-stock transaction valued at $648 million, or approximately $3.47 per Allied Capital share, it was announced on Monday.
Allied Capital shareholders will receive 0.325 shares of Ares Capital for each Allied Capital share held.
The per-share offer price is a 27.3% premium to Allied Capital's closing stock price on Friday, according to an Ares Capital news release.
Both companies' boards of directors have unanimously approved the deal, which is expected to close by the end of the first quarter of 2010, subject to shareholder approval, the release said.
Once the transaction is completed, Ares Capital shareholders will own approximately 65% of the combined company and Allied Capital stockholders will own approximately 35%.
The combined company will be managed by Ares Management LLC affiliate Ares Capital Management LLC and will have its headquarters in New York.
Ares Capital chairman Bennett Rosenthal, president Michael Arougheti and chief financial officer Richard Davis will remain in their current roles.
One member of Allied Capital's board is expected to join the Ares Capital board.
The transaction is expected to be accretive to both Ares Capital's net asset value and its core earnings per share in the first year.
"Our stockholders should benefit through resumed receipt of dividends and ownership in a company with a stronger balance sheet and proven access to the capital markets," Allied Capital CEO John Scheurer said in the release.
Ares Capital, a New York-based business development company, said it expects to reposition Allied Capital's portfolio into higher yielding assets and to seek to lower its financing costs.
The acquisition will also "significantly strengthen" Ares Capital's middle-market asset management platform, Ivy Hill Asset Management, LP, the release said.
J.P. Morgan Securities Inc. advised Ares Capital, while Allied Capital, a Washington, D.C.-based business development company, was advised by Bank of America Merrill Lynch.
| Acquirer: | Ares Capital Corp.
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| Target: | Allied Capital Corp.
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| Announcement date: | Oct. 26
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| Transaction total: | $648 million
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| Price per share: | 0.325 Ares Capital shares
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| Expected closing: | First quarter of 2010
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| Stock price for acquirer: | Nasdaq: ARCC: $10.69 on Oct. 23
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| Stock price for target: | NYSE: ALD: $2.73 on Oct. 23
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