Citing Market Conditions, Blue Owl Calls Off Merger of BDCs
Citing market conditions, Blue Owl Capital Corporation (NYSE: OBDC) and Blue Owl Capital Corporation II have terminated their previously proposed merger of OBDC and OBDC II but, according to the business development companies, plans to reevaluate alternatives in the future.
The BDCs, which both focus on lending to U.S. middle-market companies, said the decision reflects their boards’ commitment to acting in the best interests of shareholders.
“While we continue to believe that combining OBDC and OBDC II could create meaningful long-term value for shareholders, we are no longer pursuing the merger at this point given current market conditions,” said Craig W. Packer, chief executive officer of OBDC and OBDC II. “Both funds remain strong, with excellent fundamentals, and we are confident in our ability to deliver attractive returns independently as we continue to work with the board to consider the best future opportunities for OBDC II.”
The previously planned stock-for-stock transaction would have combined the pair of BDCs into a single, publicly traded entity, OBDC, with an $18.9 billion portfolio across 239 portfolio companies – reinforcing its position as the second-largest publicly traded BDC behind Blue Owl Technology Finance Corp. (NYSE: OTF). In terms of immediate cost synergies, the merger was expected close in the first quarter of 2026 and generate approximately $5 million in operational cost savings in the first year.
Now, subject to board approval, OBDC II plans to reinstate its tender program in Q1 2026. Since inception in 2017, OBDC II has delivered a nearly 80% cumulative net return and a 9.3% annualized net return, outperforming broadly syndicated loan and high yield indices, and every quarterly tender has been fully satisfied.
According to the company, “OBDC II’s strong investment results are supported by an unwavering focus on credit quality, highlighted by a loss rate since inception of 23 basis points and current non-accrual rate of less than 2% of the portfolio at fair value.”
In addition, OBDC’s $200 million share repurchase program that was announced concurrently with the merger remains in place.
OBDC is externally managed by Blue Owl Credit Advisors LLC, an investment adviser that’s an indirect affiliate of Blue Owl Capital and part of Blue Owl’s credit platform.
As of Sept. 30, 2025, OBDC had investments in 238 portfolio companies with an aggregate fair value of $17.1 billion, and OBDC II had investments in 190 portfolio companies with an aggregate fair value of $1.7 billion.
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