The AppLovin software company has made an offer to buy Unity Software Inc. for $17.54 billion in company stock, according to a report by Reuters.
If the purchase goes ahead, Unity will be unable to acquire ironSource as it had previously announced, as AppLovin occupies a similar space in the games industry. Unity may also have to pay ironSource $150 million if the merger does not go through, according to their merger agreement.
It is believed that AppLovin has offered $58.85 per Unity share, which is about 18% more than they are currently valued at on the stock market. In a combined company, Unity would have 49% of the voting rights.
In the proposed post-merger company, John Riccitiello, Unity’s Chief Executive, would be CEO. AppLovin Chief Executive Adam Foroughi would become COO. Unity’s board is currently still considering the offer, so nothing is set in stone just yet.
“The proposed price for Unity appears well below its intrinsic value, and we would expect Unity to reject it for that reason,” said Michael Pachter, an industry analyst from Wedbush Securities. “We think interference with the ironSource acquisition is problematic, and will cause Unity’s board to tread very carefully before agreeing to a sale outright.”
“This is a fascinating move – not least because it puts a question mark against Unity’s acquisition of ironSource. If the Unity and Applovin deal goes ahead, it will supercharge the UnityAds business and revenue potential for game developers, while creating an immensely powerful combined company that will be appealing to shareholders.” said James Draper, Founder & CEO of the in-game advertising company Bidstack.