Ares Taints Portfolio With Allied Assets
Ares Capital today announced it will acquire its struggling peer Allied Capital, for $648 million. The deal came as a surprise to some, as the struggling BDC has only recently secured a debt restructuring after receiving a "going concern" notice from lenders in March. The restructuring was expensive, but Allied would have been able to make its 2010 payments, thanks to liquidity from a number of asset sales. That includes the auction of Callidus Capital Management LLC, which Bloomberg reported earlier this month. It's not clear how today's deal will affect that auction. We won't get any insight into management's thinking until next week, when Allied combines its conference call on this announcement with its scheduled earnings call. What we know at this point is that Ares Capital got Allied at a good price. Judging by trading since the announcement, the stock market favors the deal, as Allied shares had traded up by 34% as of publication. (With a negative spread, perhaps they're even expecting a higher offer?) The price represented a 23.78% premium from Friday's closing price. Allied Capital has around $11 billion in committed capital under management. By contrast, Ares Capital had approximately $30.0 billion of committed capital under management as of this quarter this year.
