American Capital Ltd
Robbins Arroyo LLP: Acquisition of American Capital, Ltd. (ACAS) by Ares Capital Corporation (ARCC) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of American Capital, Ltd. (NASDAQ: ACAS) by Ares Capital Corp. (NASDAQ: ARCC). On May 23, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Ares Capital will acquire American Capital. Under the terms of the agreement, American Capital shareholders will receive $8.86 in cash and 0.483 shares of Ares Capital for each share of American Capital they own, the value of which is equivalent to $17.40 per share of American Capital.
Is the Proposed Acquisition Best for American Capital and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at American Capital is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $17.40 merger consideration represents a premium of only 21.6% based on American Capital’s last unaffected closing price on November 13, 2015. This premium is below the average one-day premium of nearly 29% for comparable transactions within the past five years. Further, the $17.40 merger consideration is significantly below the target price of $18.00 set by analysts at Sterne Agee CRT on February 22, 2016, J.P. Morgan on May 10, 2016, and Compass Point Research & Trading LLC on December 8, 2015.
On May 6, 2016, American Capital reported strong earnings results for its first quarter 2016. Total operating revenue for the quarter was $162 million, an increase of 5.2% compared to the same period last year. Net operating income for the quarter was $74 million, an increase of 48% compared to the same period last year. Additionally, American Capital has beat consensus analyst estimates for revenue in each of the last seven quarters, and has beat consensus analyst estimates for adjusted EPS and adjusted net income in three out of the past four quarters.
In light of these facts, Robbins Arroyo LLP is examining American Capital’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
American Capital shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
American Capital shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.