Blue Owl Capital Corporation (NYSE: OBDC) and its affiliate, Blue Owl Capital Corporation II, announced that the proposed merger between the two entities has been terminated. The boards of both companies made the decision on November 18 2025, and the termination became effective on that same day. The announcement was issued on November 19 2025, and the companies emphasized that the timing was not favorable for a combined transaction due to current market volatility.
The termination does not alter the day‑to‑day operations of either company. Both firms will continue to pursue independent strategies focused on providing senior secured loans to U.S. middle‑market companies. As of September 30 2025, OBDC had 238 portfolio companies with a fair value of $17.1 billion, while OBDC II held 190 portfolio companies valued at $1.7 billion. The two entities maintain largely overlapping investment portfolios, but each will now operate separately.
Blue Owl Capital Corporation II plans to reinstate its tender program in the first quarter of 2026, subject to board approval. Since its inception in 2017, OBDC II has delivered a cumulative net return of nearly 80 % and an annualized net return of 9.3 %, with a loss rate of 23 basis points and a non‑accrual rate of less than 2 %. OBDC’s $200 million share‑repurchase program remains active, underscoring the company’s commitment to returning capital to shareholders.
The merger had been expected to create synergies, enhance scale, simplify Blue Owl’s BDC structure, and strengthen OBDC’s position as the second‑largest publicly traded BDC. However, concerns about OBDC II shareholders potentially facing a 20 % on‑paper loss—stemming from OBDC trading at a discount to its net asset value—along with a withdrawal freeze on OBDC II until the merger’s completion, intensified investor backlash. These factors, combined with broader market volatility, led the boards to conclude that the transaction was not in the best interest of shareholders at this time.
CEO Craig W. Packer said, “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.” He added that both funds remain strong, with excellent fundamentals, and that the companies will continue to focus on delivering attractive returns independently while keeping the option to revisit the merger when conditions improve.
The announcement was framed as a protective measure for shareholder value, and the removal of uncertainty surrounding the transaction was viewed positively by the market. At the same time, analysts highlighted liquidity concerns and valuation issues related to OBDC II’s discount to NAV, which tempered enthusiasm. The companies’ continued focus on share repurchase and the planned tender program signal ongoing capital‑management initiatives, while the independent operation of each BDC allows them to pursue sector‑specific opportunities without the integration risks that had been anticipated under the merger plan.
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