AppLovin offers $17 billion to buy out Unity

AppLovin Corporation, a California-based gaming software company, offered to buy out Unity software, another video game software company, in an all-stock deal worth $17.54 billion on August 9, 2022. The deal threatens to overthrow unity’s plan to acquire AppLovin’s Smaller competitor ironSource.

AppLovin has offered $58.85 per Unity share, representing an 18% premium over Unity’s Monday closing price. Unity will possess 55% of the merged company’s outstanding shares, accounting for approximately 49% of voting rights. Advisors hired by AppLovin worked out the offer after unity announced that it would buy out ironSource in an all-stock transaction worth $4.4 billion, according to sources who told Reuters.

If unity wants to pursue the merger with AppLovin then the board will have to cancel the ironSource deal. Unity said its board of directors would consider the offer. On Tuesday, the company reported $297 million in quarterly revenue, up 9% year on year, while its operating loss deepened.

“The proposed price for Unity appears well below its intrinsic value, and we would expect Unity to reject it for that reason,” wrote Michael Pachter, an analyst at 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.”

If the deal is done then, John Riccitiello, Unity’s Chief Executive will become CEO of the then joined business and Adam Foroughi, AppLovin Chief Executive will become COO.

Both firms create software that is used to make video games. Game-creation software has also expanded to include new technologies such as the metaverse, or immersive virtual worlds. Major games like “Call of Duty: Mobile,” and “Pokemon Go” have been made using Unity’s software and AppLovin helps developers to grow and monetize their apps.

Currently, the game development sector and console makers are experiencing a slowdown as inflation and reduced COVID restrictions are making people take on outdoor activities.