JAKARTA / Reuters
Ares Capital Corp., the publicly traded lender managed by alternative investment firm Ares Management LP, will acquire American Capital Ltd. in a deal valued at around $3.4 billion.
Ares Capital will pay $14.95 a share in cash and stock for Bethesda, Maryland-based American Capital, the companies said in a statement Monday. The deal excludes American Capital Mortgage Management, which is being sold separately to American Capital Agency Corp. for $562 million, or $2.45 a share.
American Capital rose 1.5 percent to $15.86 in New York. Ares Capital fell 1.7 percent to $14.93.
“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,” Mike Arougheti, Ares Management’s president, said in the statement.
American Capital came under activist pressure in November when Elliott Management Corp. unveiled an 8.4 percent stake in the asset manager, calling for new directors, a strategic review, cost cuts and a review of its portfolio and capital allocation. American Capital, led by Chief Executive Officer Malon Wilkus, invests equity and debt in leveraged buyouts and management buyouts, as well directly in public and private companies.
Elliott, which now owns 14.4 percent of American Capital, said it supports the transaction.
American Capital’s “streamlined portfolio will benefit from management by an Ares team that has a stellar track record,” Jesse Cohn and Pat Frayne, portfolio managers at New York-based Elliott, said in the statement.
The combined company of Ares Capital and American Capital would manage more than $13 billion at March 31 valuations, the companies said.
Ares Management, which is providing $275 million of the acquisition price, said it expects to earn more in management and performance fees as Ares Capital’s fee-earning assets increase, though it will waive as much as $100 million in performance fees over two-and-a-half years.
Ares Management, based in Los Angeles, managed $93.5 billion in credit assets, private equity holdings and real estate as of March 31. The firm, led by CEO Tony Ressler, went public in 2014, joining peers such as Apollo Global Management LLC and Carlyle Group LP.
in holding initial public offerings.