Ares Capital Corporation — Q3 2026 M&A Earnings Summary

Financial Performance:

• The transaction involves a total enterprise value of approximately $2.6 billion.
• MFIC stockholders will receive total consideration of $10.88 per fully diluted share, consisting of approximately $1.21 per share in cash and $9.67 per share in Ares Capital common stock.
• The consideration represents a 30.1% premium to MFIC's closing share price on October 26, 2026, and a 25.8% premium to its 30-day volume-weighted average share price.
• MFIC's preliminary estimate of net asset value (NAV) per share as of September 30, 2026, is approximately $12.86.
• Ares Capital expects the combined pro forma portfolio to exceed 800 portfolio companies and over $31 billion in investments at fair value as of September 30, 2026.
• The transaction is expected to be modestly accretive to Ares Capital's core earnings per share.
• Wells Fargo has agreed to provide $750 million of additional secured financing to support the transaction.

Guidance and Future Outlook:

• The transaction is expected to close in the first half of 2027, subject to stockholder approval, regulatory approvals, and other customary conditions.
• Ares Capital anticipates the combined entity will benefit from MFIC's portfolio of senior secured investments with compelling current yields.
• The combined company expects to increase its number of sponsors transacted with to more than 600.
• Existing Ares Capital stockholders are expected to own approximately 95% of the combined company, while existing MFIC stockholders are expected to own approximately 5% (excluding the impact of the MFIC special dividend).
• Ares Capital may issue up to approximately 41 million shares of common stock to MFIC stockholders, though the final number is expected to be lower due to adjustments for the MFIC special dividend.

Business Segments and Product Lines:

• The acquisition enhances Ares Capital's position as the largest publicly traded business development company (BDC) and Ares Management's leading U.S. direct lending platform.
• MFIC's portfolio adds more than 200 incumbent positions to Ares Capital's existing portfolio.
• MFIC primarily invests in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies (defined as companies with less than $75 million in EBITDA).
• To a lesser extent, MFIC invests in other securities including first lien unitranche, second lien senior secured, unsecured, subordinated, and mezzanine loans, and equities in private and public middle-market companies.
• Ares Capital utilizes extensive direct origination capabilities to source and underwrite predominantly senior secured loans, as well as subordinated debt and equity investments.

Market and Competitive Landscape:

• The transaction strengthens Ares Capital's market presence and diversification across borrowers, industries, and sponsors.
• Ares Capital was the largest publicly traded BDC by market capitalization as of September 30, 2026.
• The deal builds on Ares Capital's nearly two-decade track record of successful strategic activity, including prior acquisitions of Allied Capital Corporation and American Capital, Ltd.
• The combined entity aims to support future investment opportunities and enhance financial resilience in dynamic market environments.

Risks and Challenges:

• The transaction is subject to risks including the failure to obtain MFIC stockholder approval, regulatory approvals, or the satisfaction of other closing conditions.
• Potential risks include competing offers or acquisition proposals for MFIC, the possibility of termination fees, and the risk of stockholder litigation.
• Uncertainties exist regarding the timing of cash flows from portfolio companies, the ability to maintain qualification as a BDC and regulated investment company, and changes in interest rates and credit spreads.
• Risks include the diversion of management attention from ongoing operations and the potential for unexpected costs or expenses related to the transaction and integration.
• Actual results may vary materially from forward-looking statements due to factors such as the amount of the special dividend, NAV per share, and trading price of Ares Capital common stock.

Management Commentary and Tone:

• Kort Schnabel, CEO of Ares Capital, stated the acquisition reinforces their leading competitive position, advances strategic goals, and enhances earnings power, expecting it to bolster the long-term growth profile.
• Scott Lem, CFO and Treasurer of Ares Capital, noted the transaction is financially compelling, expected to be accretive to core earnings, supportive of future dividends, and will preserve balance sheet strength.
• Tanner Powell, Executive Chairman and CEO of MFIC, described the agreement as a value-maximizing transaction that provides value meaningfully above MFIC's current stock price and offers an investment in the largest publicly traded BDC.
• John Zito, Co-President of Apollo Asset Management, affirmed Apollo's commitment to delivering positive outcomes and growing its middle-market direct lending franchise through the MidCap Financial platform.

Other Key Points:

• Prior to closing, MFIC expects to declare and pay a special dividend to distribute all undistributed taxable income estimated to remain as of the closing, which is expected to be meaningful.
• The Ares Capital stock consideration will be reduced dollar-for-dollar to account for the special dividend.
• MFIC stockholders will share in 50% of any premium of Ares Capital's share price in excess of NAV, up to 104.5% of NAV (maximum of 102.25% of NAV).
• Apollo Principal Holdings A, L.P. and MidCap Financial Trust, affiliates of Apollo Management owning 5.2% of MFIC's outstanding common stock, have entered into voting and support agreements with Ares Capital.
• Upon completion, Ares Capital will continue to be externally managed by Ares Capital Management LLC, with the existing Board and management team expected to remain in place.
• MFIC's final NAV per share as of September 30, 2026, will be reported in its third quarter 2026 results on November 5, 2026, and may differ from the preliminary estimate.
• Wells Fargo serves as exclusive financial advisor to Ares Capital, while Kirkland & Ellis LLP and Latham & Watkins LLP serve as legal counsel. Moelis & Company LLC serves as financial advisor to MFIC.