Ares to Buy American Capital

Ares to Buy American Capital

ares nf11Ares Capital has agreed to acquire American Capital in a cash and stock transaction valued at $3.4 billion. On a combined pro forma basis the companies would have more than $13 billion of investments at fair value as of March 31, 2016. The boards of both companies have unanimously approved the transaction.

acas nf57American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in lower and middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda (

In November of last year, ACAS hired Goldman Sachs and Credit Suisse to assist the company in undertaking a strategic review of all corporate finance alternatives. The review considered all alternatives for maximizing shareholder value, including a sale of the entire company or a sale of various business lines. In January the strategic review was completed and the board authorized the company to proceed with the solicitation of offers to purchase all of ACAS or any of its business lines.

ACAS shareholders will receive $1.5 billion in cash from Ares Capital (NASDAQ:ARCC) and 111 million Ares Capital shares currently valued at $1.7 billion. In addition, Ares Management (NYSE:ARES) will pay $275 million of cash to ACAS shareholders at closing. Following the transaction, Ares Capital shareholders will own approximately 74% of the combined company and ACAS shareholders will own the balance of 26%.

Kipp deVeer nf1“Similar to the strategy we utilized in our acquisition of Allied Capital in 2010, we plan to leverage our origination platform to redeploy the ACAS portfolio into directly-originated investments generating a higher level of current income and ultimately improved risk-adjusted returns,” said Kipp deVeer, Chief Executive Officer of Ares Capital. Ares Capital is headquartered in New York with additional offices across the country (

“The growing demand for capital from middle market borrowers has created the need for flexible capital providers like us to fill the financing gap as banks continue to retrench from the market,” said Michael Arougheti, Co-Chairman of Ares Capital’s Board of Directors. “We believe this transaction materially enhances our presence as a market leading direct lender with the size and scale to capitalize on the attractive competitive dynamics in the market today and for the foreseeable future.”

Prior to closing, ACAS is permitted to continue its plan to sell certain portfolio investments with the proceeds used to retire indebtedness or to remain in cash. Ares/ACAS will remain externally managed by Ares Capital Management and all current Ares Capital officers and directors will remain in their current roles.

Wells Fargo Securities ( and Bank of America Merrill Lynch (www.baml.ccom) served as financial advisors to Ares Capital. Goldman Sachs & Co. ( and Credit Suisse ( served as financial advisors to American Capital.

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 5-24-16

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