Carlyle Secured Lending, Inc. CGBD announced the completion of its merger with Carlyle Secured Lending III (CSL III) — a private business development company with a similar investment strategy and portfolio, with CGBD as the surviving company.
Carlyle Secured Lending is externally managed by Carlyle Global Credit Investment Management L.L.C. (“CIM”), an SEC-registered investment adviser and wholly owned subsidiary of Carlyle CG.
Details of CGBD Merger With CSL III
CSL III stockholders received 18,935,108 shares of CGBD common stock as part of the merger, based on the final exchange ratio. Furthermore, in order to remove any possible dilution risk from the Dec. 31, 2024, conversion price of $8.87, CIM traded its CGBD convertible preferred stock for 3,004,808 common shares at current NAV.
For CGBD, CIM funded $5 million in transaction fees and entered a tiered lock-up agreement to lower merger costs. The goal of the deal is to increase scale and provide steady revenues and returns for the combined company's stockholders.
Justin Plouffe, chief executive officer of CGBD, stated, “We are pleased to announce the closing of the merger transaction and thank our shareholders for their support of this strategic initiative. Building on CGBD's momentum in 2024, we look forward to continuing to execute CGBD's strategy with greater scale and seamless integration to deliver consistent income and returns for shareholders of the combined company.”
Benefits of CGBD Merger With CSL III
Carlyle Secured Lending's merger with CSL III creates a significantly larger lending platform with more than $2.8 billion in assets, enhancing its competitive position in the middle-market lending space.
CGBD's higher market capitalization following the merger is expected to offer more trading liquidity, the possibility of more institutional ownership and a broader investor base. The combined company's increased scale will enable access to diverse debt financing solutions, and drive cost savings and operational synergies for long-term efficiencies.
CGBD remains committed to lending to middle-market U.S. companies backed by financial sponsors while advantageously diversifying its portfolio with complementary lending and investing strategies. By leveraging Carlyle’s Global Credit platform, CGBD augments its origination capabilities, credit analysis and market adaptability. These efforts are intended to maximize shareholder value by balancing risk and return, capitalizing on attractive market opportunities, and mitigating credit risks through diversification.
Final Words on CGBD’s Merger
The merger of Carlyle Secured Lending and CSL III signifies a strategic alignment that is likely to enhance operational efficiency, minimize costs and uphold strong credit quality. By integrating their strategies effortlessly, the combined company is positioned to drive enhanced value for shareholders, both in the short term and over the long run.
In the past six months, shares of CGBD have gained 4.9% compared with the industry’s 11% growth.
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Currently, Carlyle Secured Lending carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Expansion Efforts by Other Financial Firms
Last month, Old Second National Bancorp, Inc. OSBC entered a definitive merger agreement to acquire Bancorp Financial, Inc. (“Bancorp Financial”) and its wholly-owned subsidiary, Evergreen Bank Group (“Evergreen Bank”). The transaction is valued at roughly $197 million. The consideration will be paid in 75% stock and 25% cash.
This transaction is likely to improve Old Second National Bancorp’s deposit mix through low-cost and core deposit franchises, with a top-quartile deposit beta and robust retail deposit concentration. It will also increase the scale of the bank, creating the second-largest community bank under $10 billion in assets in the Chicago market. Further, it will expand Old Second National Bancorp’s reach into new markets through Evergreen’s Powersport lending business.
In December, First Commonwealth Financial Corporation FCF, the parent company of First Commonwealth Bank, announced the signing of an agreement and plan for an all-stock merger with CenterGroup Financial, Inc., the holding company for CenterBank. The transaction was valued at $54.6 million in aggregate, based on the closing stock price of First Commonwealth as of Dec. 17, 2024.
As a result of the agreement, CenterGroup will merge into First Commonwealth and, subsequently, CenterBank into First Commonwealth Bank. The merger will significantly expand First Commonwealth's market share in Cincinnati by adding $348.4 million in total assets, three branch offices, a loan production office and a mortgage office to its Cincinnati franchise.
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