Unity rejects AppLovin takeover bid to focus on merging with IronSource

15 Aug 2022

Image: © pvl/Stock.adobe.com

The Unity board of directors said AppLovin’s proposal is ‘not in the best interests’ of its shareholders.

Unity Technologies has rejected a takeover proposal from mobile gaming tech company AppLovin.

Palo Alto-based AppLovin, which helps developers publish and grow their apps through mobile advertising and analytics services, made an unsolicited offer to buy Unity for $17.5bn last week.

Under the terms of the proposal, Unity would have to terminate its planned acquisition of AppLovin competitor IronSource for $4.4bn.

After a financial and strategic evaluation, Unity’s board of directors has decided the AppLovin proposal “is not in the best interests of Unity shareholders” and has urged them to vote in favour of the previously announced IronSource deal.

“The IronSource transaction is compelling and will deliver an opportunity to generate long-term value through the creation of a unique end-to-end platform that allows creators to develop, publish, run, monetise and grow live games and real-time 3D content seamlessly,” Unity CEO and president John Riccitiello said in a statement.

“We remain committed to and enthusiastic about Unity’s agreement with IronSource and the substantial benefits it will create for our shareholders and Unity creators.”

Based in San Francisco, Unity makes a platform for developing video games. Its technology has been used to build popular mobile games such as Call of Duty: Mobile, Pokémon Go and Animal Crossing: Pocket Camp.

The company has a presence in Ireland as it acquired Irish software start-up Artomatix in 2020.

AppLovin said last week it was attracted to Unity’s global reputation for “helping creators turn their inspirations into real-time 3D content” and that game developers would greatly benefit from a merger between the two companies.

It proposed a deal where Unity would own 55pc of the merged company’s assets and 49pc of voting rights. It is also proposed that Riccitiello would become CEO of the combined business, while AppLovin CEO Adam Foroughi would take on the role of chief operating officer.

However, Unity is looking to see the IronSource deal go through instead.

“The transaction will drive better economic outcomes for customers by bringing together the Unity game engine and editor, Unity Ads, and the rest of Unity Gaming Services with IronSource’s best-in-class mediation and publishing platforms,” the company wrote in a statement today (15 August).

The combined company from the Unity-IronSource deal is expected to generate a run rate of $1bn in adjusted EBITDA by the end of next year.

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Vish Gain is a journalist with Silicon Republic