The Monday announcement that Ares Capital Corporation (NASDAQ: ARCC) and American Capital, Ltd. (NASDAQ: ACAS) have entered into a definitive merger agreement under which Ares Capital will acquire American Capital, excluding American Capital Mortgage Management, LLC, has no impact on SMG according to SMG CFO John Burns.
While American Capital Corp. did acquire SMG for $631 million in 2007, it spun it off to American Capital Equity III, LP, in 2014, an event documented on American Capital’s website: “SMG was acquired by American Capital Equity III, LP in September 2014. Please visit www.ACEquity.com for more information.”
Investors in American Capital Equity III now own SMG and Wes Westley, SMG CEO, answers to a board representing those investors, Burns said. “Because of the way SMG’s ownership is structured, the sale of American Capital has no impact on SMG. We will continue operating the way we always have.”
The fact that a founder of Ares Capital, Tony Ressler, also owns the Atlanta Hawks, added fuel to the assumption Ares had acquired SMG because it acquired American Capital but, again, that’s not the case, Burns said. The pricetag for the Ares/ American Capital deal was a healthy $3.4 billion. According to Bloomberg News, “This transaction enhances Ares Capital's position as a business development company in the United States and a direct lender to middle market companies. The combined companies would have more than USD13 billion of investments at fair value as of March 31, 2016. The boards of directors of both companies have unanimously approved the transaction."
SMG has long been involved in the acquisition game. Under American Capital ownership, it did buy Premier Food Services in June 2014.
Burns, who has been with the company since 1988, recalled the origins of SMG in 1988 when the Pritzger family’s Facility Management Group merged with Spectacor to become Spectacor Management Group, later SMG. In 1990 they sold one-third of the company to Aramark.
The company grew by acquisition as well as new business, including its purchase of the facility management contracts held by Ogden Entertainment and Leisure Management International in 2000.
When SMG sold to American Capital for $631 million, Westley was hailed for negotiating such a high value for an entertainment firm of its sort, and won the 2007 Venues Today Hall of Headlines Award for News.
Acquisitions are not foreign to SMG from any direction. Westley sent out an email, which Burns confirmed, on Monday telling staff that should clients ask, the Ares/American Capital deal does not impact SMG due to their current board structure. Burns said there has been minimal inquiry and John Bolton, SMG VP of entertainment, said he'd received none from clients.
Interviewed for this story: John Burns, (610) 729-7903; John Bolton, (610) 729-7912