Exclusive: Blue Owl considers reviving merger of private credit funds, contingent on fund's share price, sources say

Blue Owl is weighing a revival of a shelved plan to merge its publicly traded OBDC fund with private Blue Owl Capital Corporation II if OBDC’s share price improves, after investor backlash forced the firm to abandon the proposal on Nov. 19 that had frozen withdrawals from the smaller vehicle; nothing is finalized and timing remains uncertain. Revival is conditional on OBDC trading close to net asset value (Q3 NAV $14.89; shares closed at $12.34), with the firm preferring a deal before the private vehicle’s liquidity event (by end-April 2026 or 2027); management has said it is also considering listing or asset sales and will allow withdrawals from Q1 2026. The merger remains Blue Owl’s preferred outcome because of portfolio overlap and potential earnings accretion, and how it resolves will be watched as a barometer for retail demand and liquidity in the rapidly growing—but recently scrutinized—private credit sector.

Analysis

Blue Owl is weighing a revival of its shelved plan to merge publicly traded OBDC with private Blue Owl Capital Corporation II if OBDC's share price improves; the firm abandoned the original proposal on Nov. 19 after investor backlash tied to freezes on withdrawals from the smaller vehicle and an offer to price those holders at the larger fund's share value. The firm disclosed OBDC's Q3 NAV at $14.89, noted that OBDC shares have traded between $11.65 and $15.73 this year and closed at $12.34, and investor materials showed the prior proposal implied roughly a 20% loss for holders of Blue Owl Capital II when OBDC was trading at a discount. Revival is explicitly conditional on OBDC trading close to book value and would preferably occur before Blue Owl Capital II's liquidity event expected by end-April 2026 or end-April 2027; management has not given a specific price target and has signaled alternatives including listing or asset sales while allowing withdrawals from Q1 2026. The merger is described as the most strategically and economically accretive option given substantial portfolio overlap (OBDC: stakes in 238 companies totalling $17.1bn; Capital II: 190 companies at $1.7bn), but sector-wide scrutiny after recent bankruptcies and mixed investor sentiment leave timing and market reception uncertain.

Key Decisions for Investors

• Monitor OBDC's market price relative to the $14.89 Q3 NAV and reassess risk/reward if the discount narrows toward parity, as a merger becomes more likely and accretive at or near book value
• Reduce or hedge exposure to Blue Owl Capital Corporation II until the firm provides definitive guidance on a merger, liquidity-event timing (end-April 2026/2027) or withdrawal mechanics given the prior ~20% implied loss scenario
• Watch management signals (formal restart of merger talks, decision to list or sell assets, and the Q1 2026 withdrawal window) and treat those developments as catalysts for repositioning rather than initiating new long exposure now