Blue Owl Capital’s Bold Move: Merging Units to Cut Costs and Boost Investor Value
Blue Owl Capital Corp. (OBDC) has announced plans to acquire Blue Owl Capital Corp. II in an all-stock transaction, expected to save $5 million in administrative costs. Despite recent stock market decreases, OBDC's CEO Craig Packer reassured investors of the company's strong credit position.
OBDC's stock has been trading below its net asset value (NAV), currently at 80% of NAV, marking the third time in five years that the market has overreacted to perceived risks. The company's adjusted net investment income (NII) in the last quarter was $0.36, down from $0.40 in the previous quarter. Additionally, OBDC's investments on non-accrual rose to 1.3% of fair value in the latest quarter, up from 0.7% in the prior quarter.
Despite these fluctuations, OBDC continues to pay a regular dividend of $0.37, yielding 12.4%, and has approved a $200 million share buyback. Only 1.4% of OBDC's $17.1 billion total portfolio is performing materially or substantially below expectations. The company's strong credit position, as noted by CEO Craig Packer on the Q3'25 earnings call, shows no broad signs of stress or increased amendment activity.
OBDC's acquisition of Blue Owl Capital Corp. II, along with its continued dividend payments and share buyback program, signals the company's confidence in its financial position. With the stock trading at a significant discount to NAV, investors may find an attractive entry point, potentially capturing a total return of over 32% if the stock rallies back to NAV, combined with the 12.4% dividend yield.
