A Story of Betrayal, SPACs And Private Equity

Massive Merger Spurns Fight Over Wall Street Secrets
Imagine your favorite team being forced to hand over its playbook to a bitter rival. That would irk any sports fan.

Now imagine a similar scenario, but it's Wall Street insiders being forced to hand over their precious trade secrets.

That exact fact pattern is unfolding due to a proposed merger between Dyal Capital and publicly traded Owl Rock Capital — a deal that has spawned multiple feisty lawsuits.

“We Honor Our Deals”
Let us set the stage: Dyal Capital, a division of asset manager Neuberger Berman, specializes in buying minority stakes in other private investment companies. A bit like nesting dolls.

In recent years Dyal has acquired stakes in firms including Golub and Sixth Street Partners, two players in the private lending .

Now Dyal is merging with Owl Rock Capital, another financier specializing in private lending — a deal that would create a $12.5 billion investment behemoth.

The Rub: Golub and Sixth Street are concerned that Dyal — which has access to sensitive information about their operations and some amount of internal influence — will quickly morph from an investor and partner into a competitor:

  • In a recent New York State Supreme Court filing, Golub said, “Dyal threatens to compete with Golub while retaining a partnership interest in it,” claiming the merger was “untenable and forbidden” under the terms of its deal.
  • Sixth Street Partners has filed to block the merger in Delaware state court, arguing it sold a stake “on the fundamental understanding that Dyal would act as a partner — not a competitor.”

For its part, Dyal has attempted to downplay concerns, claiming it has “crafted a robust and comprehensive information control policy designed to restrict access to confidential partner manager information.”

The Icing On The Cake: The tie-up of Dyal and Owl Rock is wrapped up in another Wall Street fad. The pairs merger is being backed by a SPAC called Altimar Acquisition Corp.

Source: Dealbreaker – A Story of Betrayal, SPACs And Private Equity: Dealbreaker