A Delaware court denied a request for an injunction by credit manager Sixth Street Partners to stop Owl Rock Capital Partners' $12.5 billion merger with Neuberger Berman's Dyal Capital Partners and a special purpose acquisition company, according to a ruling Tuesday.
Dyal Capital Partners' third fund, Dyal Capital Partners III, holds a passive minority interest in Sixth Street. Sixth Street sued Dyal Capital Partners over concern that Dyal was merging with one of Sixth Street's competitors. Sixth Street contended that under its agreement with Dyal, Dyal had to seek its consent before entering into the business combination with Owl Rock and the SPAC.
The court acknowledged that Sixth Street had consent rights, but Morgan T. Zurn, vice chancellor in the Delaware Chancery Court, said those rights were with the fund, Dyal Capital Partners III, and not the firm, Dyal Capital Partners.
Dyal III is " transferring nothing" in Dyal's merger transaction with Owl Rock and the SPAC, Tuesday's order said. Sixth Street also failed to show a reasonable likelihood that its lawsuit would be successful.
Ms. Zurn noted in the order that although Sixth Street executives told its investors that Dyal's merger was no cause for concern, in February, Sixth Street executives asked to buy the firm back for $417 million, the amount of Dyal's investment, in installment payments over five years. Stopping the merger would threaten the interests of Neuberger Berman and Owl Rock, she said, "who are in no way implicated in Sixth Street's relationship with Dyal III."
In response to the ruling, Sixth Street executives said they are considering "appropriate options," according to a Sixth Street statement.
"We entered into our agreement with the understanding that Dyal would be our partner and not our competitor," the statement said. "We are disappointed that Dyal and Neuberger's unreliable narrative was the basis of today's decision."
In a written statement, Dyal said in a written statement that it was pleased "with this resounding victory."
"We look forward to completing our strategic combination and remain on track to do so in the first half of this year," Dyal said.