(Bloomberg) -- Investment firm Barings BDC Inc. has agreed to buy Sierra Income Corp. in a deal valued at $623.7 million that will lift Barings to among the top 10 biggest business-development companies.
Barings BDC and Sierra will merge into a $2.2 billion entity that will be managed by Barings LLC, the companies said in a statement. Sierra is currently managed by alternative asset-management firm Medley Management Inc.
For Barings, the increase in scale means it can hold larger loans and to tap the investment-grade bond market for its financings needs, Jonathan Bock, chief financial officer at Barings BDC, said in an interview. The firm has previously only used private-placed bonds.
“Scale matters. Scale allows you to access the investment-grade bond market,” Bock said. “With rates where they are, it’s very good to tap the investment-grade bond market for financing.”
Sierra shareholders will receive $100 million of cash, or approximately 98 cents per share, and Barings BDC shares worth $523.7 million. The boards of both Barings and Sierra as well as the independent directors of Sierra and Barings BDC have all unanimously agreed to the transaction, according to both companies.
The Barings transaction is expected to close in the first quarter of 2022.
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