OBDC and OBDC II Call Off Merger Amid Volatility—What’s Next for Blue Owl’s Growth Story?
Boards Prioritize Shareholders: Merger Termination Is a Response to Market Conditions
The merger between Blue Owl Capital Corporation (NYSE:OBDC) and Blue Owl Capital Corporation II has been called off. While the original proposal aimed to unlock long-term value for shareholders, the boards of both companies—following management’s advice—opted to halt the deal in light of ongoing market volatility. Both funds plan to revisit potential opportunities once the markets stabilize, underscoring their focus on shareholder interests and prudent decision-making.
Strong Fundamentals and Outperformance Mark OBDC II’s Track Record
Despite pausing on the merger, both OBDC and OBDC II continue to demonstrate robust fundamentals. OBDC II, in particular, stands out for its exceptional investment results since launching in 2017:
| OBDC II Key Metrics | Performance |
|---|---|
| Cumulative Net Return Since Inception | ~80% |
| Annualized Net Return | 9.3% |
| Loss Rate Since Inception | 0.23% |
| Non-Accrual Rate (Fair Value) | <2% |
| Fully Satisfied Quarterly Tenders | Every quarter since inception |
These numbers speak to OBDC II’s rigorous credit standards and ability to deliver for investors—outpacing both syndicated loan and high yield benchmarks. The company is planning to reinstate its tender program in the first quarter of 2026, offering further liquidity for shareholders.
Shareholder-Focused Initiatives Continue: Share Buybacks and Strategic Reevaluation
While the merger has been shelved for now, OBDC’s $200 million share repurchase program—initially announced alongside the merger—remains active. The intent is clear: reward existing shareholders, provide price support, and demonstrate management’s confidence in OBDC’s long-term strategy.
Looking ahead, both boards remain open to reevaluating strategic alternatives. Their decision to terminate the merger is not an abandonment of growth, but a reflection of market realities. Management highlighted that “both funds remain strong, with excellent fundamentals,” and are well positioned to deliver returns as stand-alone entities.
What Does This Mean for Investors?
For now, OBDC and OBDC II shareholders will watch how each fund performs independently. The companies’ continued focus on credit quality and outperformance relative to major debt indices set a constructive backdrop for long-term growth, especially as market volatility persists.
With robust share buyback programs, an outstanding track record at OBDC II, and a clear commitment to strategic flexibility, Blue Owl’s specialty finance business is keeping its options open—without sacrificing the discipline that has driven past returns. Investors may want to track updates on OBDC II’s Q1 2026 tender and any new developments as market conditions evolve.
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