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2 Goldman Sachs Asset-managed BDCs to merge in $1B deal


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2 Goldman Sachs Asset-managed BDCs to merge in $1B deal

Goldman Sachs BDC Inc. and Goldman Sachs Middle Market Lending Corp. have agreed to merge for a total consideration of about $1 billion.

Both are affiliated business development companies managed by Goldman Sachs Asset Management LP, a unit of Goldman Sachs Group Inc.

Under the terms of the agreement, Goldman Sachs BDC will issue 0.9939 of a newly issued share for each Goldman Sachs Middle Market share outstanding. Based on the closing price of the former's shares on Dec. 6, the total consideration paid is approximately $1.0 billion, representing an 11% premium to Goldman Sachs Middle Market's Sept. 30 net asset value. The deal will also result in approximately 5.5% accretion to Goldman Sachs BDC's net asset value per share. The combined company will continue to trade under the ticker symbol GSBD on the New York Stock Exchange.

Goldman Sachs Asset Management expects the merger to be accretive to Goldman Sachs BDC's net investment income per share both in the short and long term. Goldman Sachs Asset will reduce incentive fees for the five quarters beginning in the fourth quarter and through the end of 2020, if net investment income would be less than 48 cents per share without implementation of the incentive fee cap.

The deal more than doubles the size of Goldman Sachs BDC. As a result of the merger, its total investments and commitments will be $3.3 billion, comprised of investments in 107 portfolio companies operating across 37 different industries.

Goldman Sachs BDC's board approved special distributions of 15 cents per share in total, and payable in three equal quarterly installments currently expected to begin at the end of 2020, subject to the timing of the closing of the transaction.

The merger is expected to be completed in the second quarter of 2020, subject to satisfaction of certain closing conditions, including stockholder and regulatory approvals.

BofA Securities Inc. was financial adviser, and Dechert LLP is the legal counsel to the special committee of Goldman Sachs BDC. Morgan Stanley & Co. LLC was financial adviser, and Eversheds Sutherland (US) LLP is the legal counsel to the special committee of Goldman Sachs Middle Market. Goldman Sachs Asset Management's legal adviser is Wachtell Lipton Rosen & Katz.