Blue Owl Capital Corporation and Blue Owl Capital Corporation III Announce Merger Agreement
Blue Owl Capital (NYSE: OBDC) and Blue Owl Capital III (NYSE: OBDE) have announced a merger agreement, with OBDC as the surviving company. The merger will create the second largest publicly traded BDC by total assets, with $18.4 billion in total assets at fair value. Key highlights include:
1. Acquisition of a known, high-quality portfolio with 90% investment overlap
2. Increased scale and diversification, with pro forma investment portfolio of $17.7 billion across 256 companies
3. Improved secondary market liquidity and potential for greater institutional ownership
4. Well-balanced capital structure and increased access to long-term, low-cost debt capital
5. Expected to be accretive to Net Investment Income (NII) and potential for NAV per share accretion
The transaction is subject to shareholder approvals and is expected to close in Q1 2025.
Blue Owl Capital (NYSE: OBDC) e Blue Owl Capital III (NYSE: OBDE) hanno annunciato un accordo di fusione, con OBDC come società sopravvivente. La fusione creerà il secondo BDC quotato in borsa per totale attivo, con 18,4 miliardi di dollari in attivi totali a valore equo. I punti salienti includono:
1. Acquisizione di un portafoglio noto e di alta qualità con il 90% di sovrapposizione degli investimenti
2. Maggiore scala e diversificazione, con un portafoglio di investimenti pro forma di 17,7 miliardi di dollari distribuiti su 256 aziende
3. Maggiore liquidità nel mercato secondario e potenziale per una maggiore proprietà istituzionale
4. Struttura del capitale ben bilanciata e maggiore accesso a capitale di debito a lungo termine a basso costo
5. Si prevede che sia accrescitivo per il Reddito da Investimenti Netto (NII) e potenziale accrescimento del NAV per azione
La transazione è soggetta ad approvazioni degli azionisti e si prevede si concluda nel primo trimestre del 2025.
Blue Owl Capital (NYSE: OBDC) y Blue Owl Capital III (NYSE: OBDE) han anunciado un acuerdo de fusión, con OBDC como la empresa sobreviviente. La fusión creará el segundo BDC cotizado públicamente por activos totales, con 18.4 mil millones de dólares en activos totales a valor razonable. Los principales puntos destacados incluyen:
1. Adquisición de una cartera conocida y de alta calidad con un 90% de superposición de inversiones
2. Aumento de la escala y diversificación, con una cartera de inversiones pro forma de 17.7 mil millones de dólares en 256 empresas
3. Liquidez mejorada en el mercado secundario y potencial para una mayor propiedad institucional
4. Estructura de capital bien equilibrada y mayor acceso a capital de deuda a largo plazo y de bajo costo
5. Se espera que sea accretive al Ingreso Neto por Inversión (NII) y potencial de apreciación del NAV por acción
La transacción está sujeta a aprobaciones de los accionistas y se espera que se cierre en el primer trimestre de 2025.
블루 오울 캐피탈 (NYSE: OBDC)과 블루 오울 캐피탈 III (NYSE: OBDE)가 OBDC를 존속 회사로 하는 합병 계약을 발표했습니다. 이 합병은 총 자산이 184억 달러인 두 번째로 큰 상장 BDC를 창출할 것입니다. 주요 하이라이트는 다음과 같습니다:
1. 90% 투자 중복이 있는 유명한 고급 포트폴리오 인수
2. 256개 회사에 걸쳐 177억 달러의 프로 포르마 투자 포트폴리오를 갖춘 규모 확대 및 다각화
3. 개선된 2차 시장 유동성과 더 큰 기관 소유 가능성
4. 균형 잡힌 자본 구조와 장기 저렴한 부채 자본에 대한 접근성 향상
5. 순 투자 소득(NII)에 긍정적인 영향을 미칠 것으로 예상되며, 주당 NAV 증대 가능성
이 거래는 주주 승인이 필요하며 2025년 1분기 중에 마감될 것으로 예상됩니다.
Blue Owl Capital (NYSE: OBDC) et Blue Owl Capital III (NYSE: OBDE) ont annoncé un accord de fusion, OBDC étant la société survivante. La fusion créera le deuxième BDC coté en bourse par actifs totaux, avec 18,4 milliards de dollars d'actifs totaux à valeur de marché. Les points clés incluent :
1. Acquisition d'un portefeuille reconnu de haute qualité avec 90 % de chevauchement des investissements
2. Augmentation de l'échelle et diversification, avec un portefeuille d'investissement pro forma de 17,7 milliards de dollars répartis sur 256 entreprises
3. Amélioration de la liquidité sur le marché secondaire et potentiel pour une plus grande propriété institutionnelle
4. Structure de capital bien équilibrée et accès accru à des capitaux d'emprunt à long terme et à faible coût
5. Prévision d'une augmentation du Revenu Net d'Investissement (NII) et potentiel d'accroissement du NAV par action
La transaction est soumise à l'approbation des actionnaires et devrait se conclure au premier trimestre 2025.
Blue Owl Capital (NYSE: OBDC) und Blue Owl Capital III (NYSE: OBDE) haben eine Fusionsvereinbarung angekündigt, bei der OBDC als überlebende Gesellschaft fungiert. Die Fusion wird den zweitgrößten börsennotierten BDC nach Gesamtvermögen schaffen, mit 18,4 Milliarden US-Dollar an Gesamtvermögen zum fairen Wert. Die wichtigsten Highlights sind:
1. Erwerb eines bekannten, hochwertigen Portfolios mit 90 % Anlageüberlappung
2. Erhöhte Skalierung und Diversifikation, mit einem pro forma Investitionsportfolio von 17,7 Milliarden US-Dollar in 256 Unternehmen
3. Verbesserte Liquidität im Sekundärmarkt und Potenzial für größere institutionelle Beteiligungen
4. Gut ausbalancierte Kapitalstruktur und verbesserter Zugang zu langfristigem, kostengünstigem Fremdkapital
5. Es wird erwartet, dass die Fusion den Nettoinvestitionsertrag (NII) erhöht und Potenzial für eine Wertsteigerung (NAV) pro Aktie bietet
Die Transaktion steht unter dem Vorbehalt der Genehmigungen durch die Aktionäre und soll im ersten Quartal 2025 abgeschlossen werden.
- Creation of second largest publicly traded BDC by total assets ($18.4 billion)
- Increased scale with pro forma investment portfolio of $17.7 billion across 256 companies
- 90% investment overlap between OBDC and OBDE, reducing integration risk
- Expected to be accretive to Net Investment Income (NII)
- Potential for NAV per share accretion for OBDC shareholders
- Estimated operational savings of over $5 million in the first year
- Improved secondary market liquidity and potential for greater institutional ownership
- Increased access to long-term, low-cost, flexible debt capital
- Transaction subject to shareholder approvals and regulatory approvals
- Potential integration challenges despite high portfolio overlap
- Possible short-term market volatility due to merger announcement
Insights
This merger between OBDC and OBDE is a significant development in the BDC sector. The combined entity will become the second-largest publicly traded BDC with
- Increased portfolio diversification, reducing single-investment risk
- Potential for improved liquidity and institutional ownership
- Cost savings of over
$5 million in the first year - Possible NII accretion and NAV per share growth
The merger's structure, allowing for NAV accretion based on OBDC's trading price, is particularly shareholder-friendly. However, investors should monitor potential integration challenges and the impact on dividend policies post-merger.
This merger reflects broader trends in the BDC market towards consolidation and scale. The combined entity's increased size could lead to:
- Enhanced bargaining power in deal-making
- Potentially lower borrowing costs
- Improved ability to weather economic downturns
The
The merger agreement includes several noteworthy legal aspects:
- Shareholder approvals required from both OBDC and OBDE
- Regulatory approvals needed, typical for financial sector mergers
- Waiver of remaining lock-ups on OBDE shares if merger closes before January 25th
- Continuation of OBDC's existing share repurchase program
The exchange ratio mechanism is particularly interesting, as it's designed to potentially benefit both sets of shareholders depending on OBDC's trading price. This structure could serve as a template for future BDC mergers. Investors should closely monitor the shareholder approval process and any potential regulatory hurdles that could affect the expected Q1 2025 closing timeline.
Merger of two high-quality, diversified portfolios with substantial investment overlap significantly enhances scale
Will create second largest publicly traded BDC by total assets, with
Craig W. Packer, Chief Executive Officer of OBDC and OBDE said, "We believe now is the right time to deliver long-term value for both OBDC and OBDE shareholders and streamline our direct lending platform. The merger is set to enhance scale while preserving our strong credit quality. This increased scale positions the combined company to deliver attractive risk-adjusted returns for shareholders in the years to come."
Key Transaction Highlights
- Acquisition of a Known, High-Quality Portfolio of Assets – OBDC and OBDE employ the same investment strategy, and Blue Owl Capital Inc. ("Blue Owl") has been allocating the same investments to both funds since OBDE's inception. As a result, approximately
90% of the investments in OBDE overlap with those of OBDC. The combination of two known, complementary portfolios, constructed and managed by the same centralized team, will facilitate portfolio consolidation and meaningfully mitigate potential integration risk.
- Increased Scale and Diversification – The proposed merger will increase OBDC's total investments by approximately
30% , meaningfully increasing the combined company's scale. OBDC's investment portfolio on a pro forma basis at fair value is expected to increase to approximately$17.7 billion 0.4% as of June 30, 2024. Diversification is also critical to risk mitigation, reducing reliance on the success of any one investment, and this proposed merger strengthens that effort. The combined company is expected to be the second largest externally managed, publicly traded BDC by total assets.
- Improved Secondary Market Liquidity – The increased market capitalization following the proposed merger may result in enhanced trading liquidity and potential for greater institutional ownership. Elimination of a second diversified publicly traded BDC reduces arbitrage opportunities while streamlining Blue Owl BDCs' organizational structure.
- Well-Balanced Capital Structure and Increased Access to Long-Term, Low-Cost, Flexible Debt Capital – The increased scale of the combined company may create potential for more diverse funding sources, while consolidating existing facilities. Greater scale and structural simplification could improve cost of debt and allow for more favorable financing terms over time. The combined company may benefit from OBDC's higher investment grade credit ratings to drive additional funding cost savings.
- Accretive to Net Investment Income ("NII") – The proposed merger is expected to be accretive to NII over time, driven by operational savings through the elimination of duplicative expenses, which both OBDC and OBDE estimate could be in excess of
$5 million
- Opportunity for Net Asset Value ("NAV") Per Share Accretion – The terms of the transaction allow for potential NAV per share accretion to OBDC if shares of OBDC are trading above OBDC's NAV per share at the time of closing. Additionally, the structure allows for OBDE shareholder consideration to be valued at a potential premium to OBDE's NAV per share if shares of OBDC are trading above OBDC's NAV per share at the time of closing.
Exchange Ratio
Under the terms of the proposed merger, shareholders of OBDE will receive newly issued shares of OBDC for each share of OBDE based on the Exchange Ratio determined prior to closing. The Exchange Ratio will be calculated based upon (i) the NAV per share of OBDC and OBDE, each determined before merger close and (ii) the market price of OBDC common stock ("OBDC Price") before merger close. Formulaically, the Exchange Ratio will be determined as follows.
Scenario | OBDC Price / OBDC | Exchange Ratio |
1 | ≤ | OBDE NAV per share / OBDC NAV per share |
2 | (OBDE NAV per share x (1 + | |
3 | > | OBDE NAV per share x |
Additional Transaction Details
In connection with and in support of the transaction, only if the proposed merger is consummated, OBDC's advisor, Blue Owl Credit Advisors LLC, has agreed to reimburse fees and expenses associated with the merger up to a cap of
Prior to the anticipated closing of the proposed merger, OBDC and OBDE intend to declare and pay ordinary course quarterly dividends.
Prior to the closing of the proposed merger, subject to the approval of OBDE's board of directors, OBDE will declare a dividend to OBDE's shareholders equal to any undistributed net investment income estimated to be remaining as of the closing of the proposed merger. This will include any unpaid special dividends previously declared in conjunction with OBDE's listing in January 2024.
If the merger closes prior to January 25th, any lock-ups remaining on shares of OBDE as of the closing will be waived.
Following the closing of the proposed merger, OBDC's existing
The combined company will be externally managed by Blue Owl Credit Advisors LLC, and all current OBDC officers and directors will remain in their current roles. The combined company will trade under the ticker "OBDC" on the New York Stock Exchange.
Completion of the proposed merger is subject to OBDC and OBDE shareholder approvals, customary regulatory approvals and other customary closing conditions. Assuming satisfaction of these conditions, the transaction is expected to close in the first quarter of 2025.
Advisors
BofA Securities and Truist Securities are serving as lead financial advisors to OBDC in connection with the transaction. ING Financial Markets LLC and MUFG Bank, Ltd are also acting as co-financial advisors to OBDC. Eversheds Sutherland (US) LLP is acting as the legal counsel to the special committee of OBDC.
Keefe, Bruyette & Woods, A Stifel Company, is serving as lead financial advisor to OBDE. SMBC is also acting as co-financial advisor to OBDE. Stradley Ronon Stevens & Young LLP is serving as legal counsel to the special committee of OBDE.
Kirkland & Ellis LLP is serving as legal counsel to the investment advisors of OBDC and OBDE.
Conference Calls
OBDC will hold a conference call to discuss the merger and its second quarter 2024 financial results at 10:00 a.m. Eastern Time on Thursday, August 8, 2024. OBDE will hold a conference call to discuss the merger and its second quarter 2024 financial results at 11:00 a.m. Eastern Time on the same day following OBDC's call.
OBDC Call Details
A live webcast will be available on the Events section of OBDC's website at www.blueowlcapitalcorporation.com. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
Domestic: (877) 737-7048
International: +1 (201) 689-8523
All callers will need to reference "Blue Owl Capital Corporation" once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
OBDE Call Details
A live webcast will be available on the Events section of OBDE's website at www.blueowlcapitalcorporationiii.com. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
Domestic: (877) 407-9714
International: +1 (201) 689-8865
All callers will need to reference "Blue Owl Capital Corporation III" once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
About Blue Owl Capital Corporation
Blue Owl Capital Corporation (NYSE: OBDC) is a specialty finance company focused on lending to
About Blue Owl Capital Corporation III
Blue Owl Capital Corporation III (NYSE: OBDE) is a specialty finance company focused on lending to
Forward-Looking Statements
Some of the statements in this press release constitute forward-looking statements because they relate to future events, future performance or financial condition of OBDC or OBDE or the two-step merger (collectively, the "Mergers") of OBDE with and into OBDC. The forward-looking statements may include statements as to: future operating results of OBDC and OBDE and distribution projections; business prospects of OBDC and OBDE and the prospects of their portfolio companies; and the impact of the investments that OBDC and OBDE expect to make. In addition, words such as "anticipate," "believe," "expect," "seek," "plan," "should," "estimate," "project" and "intend" indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) the timing or likelihood of the Mergers closing; (ii) the expected synergies and savings associated with the Mergers; (iii) the ability to realize the anticipated benefits of the Mergers, including the expected accretion to net investment income and the elimination or reduction of certain expenses and costs due to the Mergers; (iv) the percentage of OBDC and OBDE shareholders voting in favor of the proposals submitted for their approval; (v) the possibility that competing offers or acquisition proposals will be made; (vi) the possibility that any or all of the various conditions to the consummation of the Mergers may not be satisfied or waived; (vii) risks related to diverting management's attention from ongoing business operations; (viii) the risk that shareholder litigation in connection with the Mergers may result in significant costs of defense and liability; (ix) changes in the economy, financial markets and political environment; (x) the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing war between
Additional Information and Where to Find It
In connection with the Mergers, OBDC and OBDE plan to file with the SEC and mail to their respective shareholders a joint proxy statement/prospectus (the "Joint Proxy Statement") and OBDC plans to file with the SEC a registration statement on Form N-14 (the "Registration Statement") that will include the Joint Proxy Statement and a prospectus of OBDC. The Joint Proxy Statement and Registration Statement will each contain important information about OBDC, OBDE, the Mergers and related matters. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. SHAREHOLDERS OF OBDC AND OBDE ARE URGED TO READ THE JOINT PROXY STATEMENT AND THE REGISTRATION STATEMENT AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OBDC, OBDE, THE MERGERS AND RELATED MATTERS. Investors and security holders will be able to obtain the documentation filed with the SEC free of charge at the SEC's website, http://www.sec.gov and for documents filed by OBDC, from OBDC's website at https://www.blueowlcapitalcorporation.com and for documents filed by OBDE, from OBDE's website at https://www.blueowlcapitalcorporationiii.com.
Participation in the Solicitation
OBDC, its directors, certain of its executive officers and certain employees and officers of Blue Owl Credit Advisors LLC and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Merger. Information about directors and executive officers of OBDC is set forth in its proxy statement for its 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 28, 2024. OBDE, its directors, certain of its executive officers and certain employees and officers of Blue Owl Diversified Credit Advisors LLC and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Merger. Information about directors and executive officers of OBDE is set forth in its proxy statement for its 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 28, 2024. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the OBDC and OBDE shareholders in connection with the Merger will be contained in the Joint Proxy Statement when such document becomes available. These documents may be obtained free of charge from the sources indicated above.
Investor Contact:
BDC Investor Relations
Michael Mosticchio
michael.mosticchio@blueowl.com
Media Contact:
Prosek Partners
Josh
pro-blueowl@prosek.com
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SOURCE Blue Owl Capital Corporation
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