Massive Merger Spurns Fight Over Wall Street Secrets

Imagine your favorite sports team was forced to hand its playbook over 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…

Jennifer
Massive Merger Spurns Fight Over Wall Street Secrets
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Imagine your favorite sports team was forced to hand its playbook over 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 scenario is unfolding due to a proposed merger with Dyal Capital, Owl Rock Capital, and a SPAC — a bonanza 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 private investment companies. In recent years it has acquired stakes in firms including Golub and Sixth Street Partners, two firms that compete in the private lending space.

Now, Dyal Capital is merging with Owl Rock Capital, another financier specializing in private lending for private equity transactions.

Golub and Sixth Street are concerned that Dyal — which has access to sensitive information about their operations and input into their decisions — has morphed from an investor and partner into a prime competitor:

  • “Dyal threatens to compete with Golub while retaining a partnership interest in it,” Golub Capital said in a New York State Supreme Court filing, claiming the merger was “untenable and forbidden.”
  • 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”.

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

the takeaway

There has never been a more lucrative time to be a lawyer working on Wall Street deals.

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