A $600 million disagreement is throwing a wrench in the creation of a new investing behemoth.
Sixth Street Partners, a $50 billion investment firm, is asking a court to block Owl Rock Capital Partners' merger with Dyal Capital Partners until concerns it has about the transaction are addressed. At issue is Dyal's ownership stake in Alan Waxman's Sixth Street, which does not want to be affiliated with a rival credit manager like Owl Rock.
Last week, before Mr. Waxman's firm took Dyal to court, it offered to buy back the stake from Dyal, according to people with knowledge of the matter. Sixth Street executives told Dyal on a Zoom call that they would repurchase the ownership piece at the price Dyal paid four years back — about $420 million — to resolve the impasse, the people said, asking not to be identified as the information isn't public.
Dyal balked and has refused to accept that offer, believing its share should be worth more than $1 billion, a near $600 million difference, the people said. The ensuing logjam has now turned into a battle where Sixth Street is seeking an injunction on Dyal's merger until the issues are ironed out.
Sixth Street is looking to buy its stake at what's known as "at cost." That price is also closer to the level Dyal disclosed to its own investors recently, the people said. While Dyal's fund has marked its interest at about $545 million, its management believes that the stake should be worth about double that price in the event of a sale, given how much Sixth Street's assets have surged, the people said.
Representatives for Sixth Street and Dyal declined to comment.