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NEW YORK (TheStreet) -- Ares Capital (ARCC) - Get Ares Capital Corporation Report stock is down 4.02% to $14.58 on heavy trading volume Monday afternoon after agreeing to acquire rival finance company American Capital (ACAS) in a cash-and-stock deal valued at $3.4 billion.

Ares will pay $14.95 per share in cash and stock for American Capital. The deal does not include American Capital Mortgage Management, which is being sold separately to American Capital Agency (AGNC) for $562 million.

Ares expects the deal to immediately boost its core earnings per share and to be accretive to net asset value per share between the first and second years after closing. 

"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.

About 4.67 million shares of Ares have been traded so far today, well above the company's average trading volume of roughly 991,496 shares per day. 

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TheStreet Recommends

Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.

Ares Capital's strengths such as its increase in net income, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

You can view the full analysis from the report here: ARCC

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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