Blue Owl Board Urges Rejection of Saba's Discounted Tender Offer, Highlighting Imminent At-NAV Payouts

Blue Owl Capital Corporation II's board is advising shareholders to reject a tender offer from Saba Capital, arguing the offer price is over 30% below the fund's Net Asset Value (NAV).

The board's key reason is that the company is already executing a plan to return significant cash to all shareholders at or near full NAV, starting with a large payment this month.

This creates a conflict between a third-party's offer of a quick but discounted exit versus the company's own plan for superior, near-term value realization for investors.

The tender offer is likely to see low participation as the board's economic argument is strong, with the company proceeding with its scheduled capital return plan.

The board of Blue Owl Capital Corporation II (OBDC II) has strongly recommended that its shareholders reject an unsolicited tender offer from activist investor Saba Capital.

At its core, this is a classic showdown over value and timing. Saba Capital, along with its partner, is offering to buy a minority stake in OBDC II at a price more than 30% below its Net Asset Value (NAV). They pitch this as an opportunity for investors in the non-traded fund to gain immediate 'liquidity'—a way to cash out quickly.

However, the OBDC II board argues this offer is not just low, but value-destructive for shareholders. Their reasoning is based on a clear sequence of events. First, the company recently demonstrated the high quality of its portfolio by selling $1.4 billion in loan assets for 99.7% of their face value. This sale wasn't just a theoretical valuation; it was a real-world transaction that validated the fund's NAV.

Second, and more importantly, the cash from this sale is already earmarked for shareholders. OBDC II is in the process of distributing a significant Return of Capital (ROC) of $2.50 per share, which represents about 30% of its NAV, to be paid by the end of March. Additional distributions are planned quarterly. Therefore, the board's message is simple: why would an investor accept a 30% discount from Saba today when they are scheduled to receive a 30% payout at full value from the company within weeks?

This situation was partly set up when a planned merger involving OBDC II was terminated late last year, leaving it as a standalone, non-traded entity. This, combined with recent market volatility, may have created a window of uncertainty that Saba is seeking to exploit. The conflict thus boils down to a choice: the certainty of a quick but deeply discounted exit offered by an activist, versus the certainty of the company's own near-term, at-NAV distribution plan. Given that the company's plan is already in motion and backed by successful asset sales, the board's case for rejection is compelling.

Tender Offer: An offer made by a potential buyer to purchase some or all of a company's shares from existing shareholders at a specified price.
Net Asset Value (NAV): The total value of a fund's assets minus its liabilities, often expressed on a per-share basis. It represents the underlying value of each share.
Return of Capital (ROC): A payment received from an investment that is not considered income but a return of the original investment capital. In this case, it's a way to distribute proceeds from asset sales to shareholders.