Blue Owl Capital announced that it has terminated the merger between its two specialty finance vehicles, Blue Owl Capital Corporation (OBDC) and Blue Owl Capital Corporation II (OBDC II), effective November 18, 2025. The decision was made by the boards of both entities and was disclosed on November 19, 2025, citing heightened market volatility as the primary reason for the pause.
The merger had been announced on November 5, 2025, with the intent to combine OBDC’s $17.1 billion of assets and 238 portfolio companies with OBDC II’s $1.7 billion and 190 portfolio companies into a single $18.9 billion vehicle. The two funds had a 98 % overlap in holdings, suggesting minimal integration risk. Termination means the two funds will continue to operate independently, preserving their distinct investment strategies and fee structures.
OBDC II plans to reinstate its tender program in the first quarter of 2026, subject to board approval. While the exact size and terms of the program have not been disclosed, the move signals a commitment to providing liquidity to investors after the failed merger.
OBDC maintains its $200 million share‑repurchase program, underscoring management’s confidence in the fund’s standalone value and its ability to return capital to shareholders.
Financially, OBDC II has delivered a cumulative net return of nearly 80 % and an annualized net return of 9.3 % since inception. OBDC’s portfolio was valued at $17.1 billion as of September 30, 2025, with 238 portfolio companies. In Q3 2025, OBDC’s adjusted net investment income (NII) per share fell to $0.36, below the quarterly base dividend of $0.37, indicating that the fund may need to borrow to sustain its dividend payout and that retained earnings are insufficient for growth.
The announcement was met with a positive market reaction: OBDC and its parent, Blue Owl Capital Inc. (OWL), both gained roughly 2 % in pre‑market trading on November 19, 2025. Investors interpreted the termination as a prudent move to avoid dilution and potential volatility in a combined structure, while the continuation of shareholder‑return programs reinforced confidence in the funds’ long‑term prospects.
CEO Craig W. Packer emphasized that both OBDC and OBDC II remain strong and that the company remains open to exploring alternative opportunities in the future. He highlighted the funds’ robust fundamentals and the importance of maintaining independent operations to preserve performance.
The termination preserves each vehicle’s performance trajectory and allows management to focus on their respective strategies. OBDC’s share‑repurchase program and OBDC II’s planned tender offer provide clear signals of ongoing shareholder value creation, while the decline in OBDC’s NII per share underscores the need for careful capital management in a volatile environment. Together, these actions position the funds to navigate current market headwinds while maintaining investor confidence.
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