425: ISS and Glass Lewis Recommend Shareholders Approve Blue Owl Capital Merger

Leading proxy advisory firms ISS and Glass Lewis recommend that shareholders vote in favor of the proposed merger between Blue Owl Capital Corporation (OBDC) and Blue Owl Capital Corporation III (OBDE).

Summary

• Institutional Shareholder Services (ISS) and Glass Lewis & Co. have both recommended that shareholders of Blue Owl Capital Corporation (OBDC) and Blue Owl Capital Corporation III (OBDE) vote in favor of the proposed merger.
• ISS stated that the merger's strategic rationale appears sound, citing increased scale and potential for long-term expense savings.
• Glass Lewis believes the merger should be straightforward due to the similar investment mandates, portfolio strategies, and risk-return profiles of the two BDCs.
• The combined company is expected to become the second-largest publicly traded BDC by total assets.
• Special meetings for shareholders to vote on the merger are scheduled for January 8, 2025.
• Shareholders are urged to vote by 11:59 p.m. Eastern Time on January 7, 2025.

Sentiment

Score: 8

Explanation: The document is generally positive, with strong support for the merger from proxy advisory firms and management. However, it also acknowledges risks and uncertainties associated with the merger, preventing a perfect score.

Positives

• The merger is expected to create a larger, more diversified company.
• The merger is expected to result in long-term expense savings.
• The merger is supported by leading independent proxy advisory firms.
• The combined company will have increased scale that may improve trading dynamics.

Negatives

• The document does not explicitly mention any negatives, but it does highlight risks associated with the merger.

Risks

• The timing or likelihood of the merger closing is uncertain.
• The expected synergies and savings associated with the merger may not be fully realized.
• The ability to realize the anticipated benefits of the merger is not guaranteed.
• There is a risk that competing offers or acquisition proposals will be made.
• The various conditions to the consummation of the merger may not be satisfied or waived.
• The merger could divert management's attention from ongoing business operations.
• Shareholder litigation in connection with the merger may result in significant costs.
• Changes in the economy, financial markets, and political environment could impact the merger.
• Geo-political conditions could impact the merger.
• Future changes in law or regulations could impact the merger.
• An economic downturn, elevated interest and inflation rates, and ongoing supply chain and labor market disruptions could impact the merger.
• The ability of Blue Owl Credit Advisors LLC to locate suitable investments for the combined company is not guaranteed.
• The ability of Blue Owl Credit Advisors LLC to attract and retain highly talented professionals is not guaranteed.

Future Outlook

The merger is expected to significantly enhance OBDC's scale and diversification, resulting in the second-largest publicly traded BDC by total assets. The document also includes forward-looking statements regarding future operating results, business prospects, and the impact of investments, all of which are subject to various risks and uncertainties.

Management Comments

• Craig W. Packer, Chief Executive Officer of OBDC and OBDE, stated that they are pleased that ISS and Glass Lewis support the Boards unanimous recommendation that shareholders vote FOR the pending merger.
• Management believes the merger will significantly enhance OBDC's scale and diversification.

Industry Context

This announcement is relevant to the Business Development Company (BDC) sector, where mergers and acquisitions are sometimes used to achieve greater scale and efficiency. The recommendation from ISS and Glass Lewis is a significant factor in the merger's likelihood of success.

Comparison to Industry Standards

• The document states that the merger is expected to create the second-largest publicly traded BDC by total assets, indicating a significant scale compared to other BDCs.
• While the document does not provide specific comparisons to other BDCs, the focus on increased scale and diversification suggests that the merger aims to improve the combined company's competitive position within the industry.
• The document does not provide specific financial metrics for comparison to other BDCs, but the fair value of investments for both OBDC and OBDE are provided.

Stakeholder Impact

• Shareholders are urged to vote on the merger, which is expected to enhance the value of their holdings.
• Employees of both companies may be impacted by the merger, although the document does not provide specific details.
• Customers and suppliers of both companies may experience changes as a result of the merger, although the document does not provide specific details.
• Creditors of both companies may be impacted by the merger, although the document does not provide specific details.

Next Steps

• Shareholders of OBDC and OBDE are to vote on the merger at special meetings on January 8, 2025.
• Shareholders are urged to vote by 11:59 p.m. Eastern Time on January 7, 2025.

Key Dates

Keywords

merger, BDC, Blue Owl Capital, OBDC, OBDE, proxy advisory, ISS, Glass Lewis, shareholders, special meeting, synergies, business development company