Ares Capital to Buy MFIC for $10.88 a Share: $1.21 Cash Plus ARCC Stock on a NAV Collar, October 26, 2026

What the agreement says

The 8-K (Item 1.01) describes two mergers. A subsidiary of ARCC merges into MFIC, which survives as a wholly owned subsidiary; right after, MFIC merges into a second ARCC subsidiary, a Delaware LLC, which survives. MFIC's board approved it on the recommendation of a special committee of its independent directors, and ARCC's board approved it. The filing is dated October 26, 2026 and was filed on October 27. The accession number 0001104659-26-118961 sometimes cited for it is the same text filed under Rule 425; the Form 8-K itself is 0001104659-26-118958.

Nine months after October 26, 2026 is July 26, 2027, and the three-month extension would run to October 26, 2027 (our arithmetic). The release says that once complete ARCC continues to be managed by Ares Capital Management LLC, with its board and management expected to stay.

The exchange ratio, band by band

Three formulas apply, depending on where ARCC's closing price sits against its own NAV per share on the pricing date. “Parent Per Share NAV” is ARCC's net asset value divided by shares outstanding, calculated by ARCC in good faith, with an accrual for any dividend declared and not yet paid. “Parent Common Stock Price” is ARCC's closing price on the day the NAV is determined. D below is the Post-Signing Tax Dividend Amount.

The ratio is rounded to four decimals. The press release describes the same mechanics in words: ARCC stock is valued at the greater of NAV and the share price, and MFIC holders share in 50% of any premium to NAV up to 104.5%, “which represents a maximum of 102.25% of NAV.”

What this means in practice, with ARCC's September 30, 2026 NAV of $19.31 standing in for the unknown NAV at closing. Every row is our arithmetic of the formula on hypothetical ARCC prices; none is a forecast.

Three readings follow from the table. The $10.88 headline is what MFIC holders receive if ARCC closes at its NAV, not a floor: there is no minimum, so a lower ARCC price lowers the stock value at the same rate. The upside is limited: between NAV and 104.5% MFIC holders keep half of ARCC's premium, and above 104.5% they keep none of it, because fewer shares are issued as the price rises. And a special dividend does not change the total much; it turns part of the stock part into cash. At 100% of NAV the total with a $0.50 dividend is still $10.88; in other rows it differs by a cent or so because the ratio is rounded to four decimals.

The size matters for ARCC's holders as well. At the 0.5008 ratio, 82,372,628 MFIC shares would receive about 41.25 million ARCC shares, in line with the press release's “up to approximately 41 million.” ARCC had 722,194,973 shares outstanding on October 22, 2026, so the new shares would be about 5.4% of the total (our arithmetic); the release puts MFIC holders at roughly 5% of the combined company before the special dividend adjustment.

What each side puts in, in dollars of NAV

Since ARCC issues stock counted at NAV, the comparison with MFIC's own NAV shows what the exchange ratio does to ARCC's net assets. MFIC's preliminary September 30 NAV of $12.86 is a management estimate that its board has not approved and its auditor has not reviewed, per the release. Using it:

• ARCC would issue about 41.25 million shares at a NAV of $19.31, which is $796.5 million of stock at NAV; MFIC's preliminary net assets are $12.86 times 82,372,628 shares, $1,059 million. The difference is about $263 million, or $0.34 per pro forma ARCC share (our arithmetic). It is before deal costs and before ARCC marks the MFIC portfolio: management said on the call that it does not know where it will mark the assets when the deal closes and that it will mark them at fair value on day one. ARCC's release speaks only of “modestly accretive” core earnings per share, not of NAV.
• A special dividend D reduces MFIC's NAV and the shares ARCC issues by the same amount per MFIC share, so this difference does not depend on it (our arithmetic).
• The $1.21 cash comes from the adviser. On the October 27 call an ARCC executive said the cash from Ares Management “allows ARCC to buy the assets at an even deeper discount while still providing the MidCap shareholders with a nice premium.”

Who has agreed, and what ends the deal

Voting and support agreements were signed with two Apollo affiliates, Apollo Principal Holdings A, L.P. and MidCap Financial Trust, covering 4,281,394 MFIC shares. Each agreed to vote for the mergers and any adjournment, not to transfer the shares and not to breach the no-shop. The agreements end at the earliest of the effective time, an amendment that cuts the consideration or changes its form without their consent, termination of the merger agreement, a change in the MFIC board's recommendation, or mutual consent. The press release says the two affiliates together hold 5.2% of MFIC; 4,281,394 divided by 82,372,628 is 5.20% (our arithmetic).

The fee is payable if MFIC terminates to accept a Superior Proposal, and in certain other cases including a termination after the MFIC board withdraws or changes its recommendation. A majority of all outstanding shares, not of those voting, is the standard: shares that do not vote count against.

ARCC and MFIC side by side, from their own filings

Dates differ, and that matters: ARCC's latest filing is its Form 10-Q for the quarter ended September 30, 2026 (filed October 27, 2026); MFIC's latest 10-Q is for June 30, 2026 (filed August 6, 2026), and its September 30 report is due November 5, 2026. MFIC's page on our site has the longer record: MFIC stock: dividend cut to $0.31, NAV and Apollo fees. The ARCC history is on ARCC: dividend vs Core EPS, NAV and non-accruals.

On the call, ARCC's chief financial officer said bringing in the MFIC portfolio “doesn't change our overall leverage strategy,” that ARCC is “targeting the 0.9x to 1.25x” and has been “in that 1.1x-ish range the past few quarters.” An analyst had noted MFIC's leverage was above ARCC's. ARCC also said it will apply its own non-accrual policy to the acquired loans and mark them at fair value on day one.

Two figures in the table separate the companies most: credit and leverage. MFIC reports 4.6% of its investments on non-accrual at cost against ARCC's 2.4%, and asset coverage of 163% against ARCC's 188%, with the dates noted above (our reading of the two filings).

Income per MFIC share before and after (our arithmetic)

At a ratio of 0.5008 and ARCC's declared $0.48 a quarter, an MFIC share would be entitled to $0.2404 a quarter in ARCC dividends, $0.96 a year, against the $1.24 a year that MFIC's $0.31 a quarter implies. That is 77.5%. With a $0.50 special dividend the ratio is 0.4749, which gives $0.2280 a quarter, 73.5% of $0.31. The one-time $1.21 in cash, equal to 3.9 quarters of MFIC's $0.31, is not recurring income. All of this assumes that both dividends stay where they are, which neither company has committed to: the merger agreement limits MFIC's pre-closing quarterly dividend to $0.31 a share, and ARCC's release speaks of “confidence in the current level” of its dividend, a statement of intent and not a promise.

The special dividend itself is a cash payment of D per MFIC share on top of this, once.

What the filings do not say yet

• No proxy statement or prospectus. ARCC says it will file a Form N-14 that includes MFIC's proxy statement. None is on EDGAR as of November 1, 2026, so there is no record date, no meeting date and no description of the process that led to the price.
• The special dividend. The amount is unknown; it is described only as the undistributed taxable income estimated to remain at closing, which the release says is “expected to be meaningful.”
• ARCC's NAV and price on the pricing date. The ratio is set within days of closing, in the first half of 2027 at the earliest.
• The tax treatment of the $1.21. The documents say the mergers are intended to be a reorganization under Section 368(a). They do not say how the cash from the adviser or the special dividend is taxed for an individual holder; the N-14 and a tax adviser are the places to look.
• MFIC's third-quarter numbers. MFIC cancelled its November 5 call because of the deal and will issue results that morning, with the preliminary NAV of $12.86 replaced by a final one.

What a reader can do with this

This is a checklist built from the documents, not a recommendation, and it does not say how to vote or whether to buy or sell.

• Work out the ratio yourself. Use the three formulas above with ARCC's NAV and closing price once they are known; the table shows how much of the $10.88 depends on ARCC's price.
• Separate the stock from the cash. Of the $10.88, $1.21 is a fixed amount of cash from the adviser and the rest moves with ARCC's price and the special dividend.
• Read the N-14 when it is filed. Look for the board's background section, the fairness opinions, the record date and the meeting date, and the tax disclosure.
• Compare the two income streams. The comparison above uses declared dividends; the filings guarantee neither. Our list of BDC stocks and the private credit non-accrual census put both companies next to the rest of the listed BDCs.
• Mind the dates. MFIC's results are due November 5, 2026, and ARCC's fourth-quarter dividend has a record date of December 15, 2026.

FAQ

All terms are from the Form 8-K of Ares Capital Corporation dated October 26, 2026, filed October 27, 2026 (accession 0001104659-26-118958) with Exhibit 2.1 (Agreement and Plan of Merger), Exhibit 10.1 (form of Voting and Support Agreement) and Exhibit 99.1 (joint press release); the same text filed under Rule 425 (accession 0001104659-26-118961); the Rule 425 excerpts of the October 27 earnings call and of an October 29 interview (accessions 0001104659-26-119290 and 0001104659-26-120293); ARCC's Form 10-Q for the quarter ended September 30, 2026 (accession 0001628280-26-067383) and its earnings release of October 27, 2026 (accession 0001628280-26-067382); MFIC's Form 8-K of October 27, 2026 (accession 0001193125-26-432622), its Form 10-Q for June 30, 2026 (accession 0001193125-26-335848), its earnings release of August 6, 2026 (accession 0001193125-26-336509) and its Rule 425 notice of October 30, 2026 (accession 0001193125-26-441849), all read on EDGAR on November 1, 2026. Ratios, sums, percentages of NAV and worked examples are our arithmetic on hypothetical prices. The collar tables are not forecasts. The preliminary MFIC NAV of $12.86 is a management estimate that its auditor has not reviewed. This is analysis of public documents, not investment, legal or tax advice.