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AppLovin offers to acquire Unity for $17.5 billion

The acquisition threatens to unravel the Unity IronSource merger
AppLovin offers to acquire Unity for $17.5 billion
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AppLovin have offered to acquire Unity for $17.5 billion dollars, according to a report from Reuters. The offered price comes to $58.85 per share, at a premium of 18% to Unity’s stock price at close of business on Monday.

The proposal would see Unity CEO John Riccitiello as the CEO of the combined businesses, with Applovin CEO Adam Foroughi as the COO of the new entity. In return, Unity would own 55 per cent of outstanding shares, approximately 49 per cent of the voting rights.

However, the merger would require the approval of both company’s board of directors, as well as the termination of Unity’s proposed deal with IronSource, as well as other customary conditions. Sources familiar with the matter told Reuters that advisors have been working with AppLovin to arrange a deal following news of the prior acquisition plans being published last month.

Unity has said that its board will evaluate the offer.

Despite the financial implications and increased market share that such an acquisition would see, some within the industry are wary of its success.

"The deal comes as surprise to everybody in the business," said Kantan Games founder Serkan Toto. "It's a $15 billion company going after a $15 billion company. It's a desperate attempt to consolidate and the chances of this deal happening are very slim."

Although Reuters is reporting this as an acquisition, in other places, such as in a press release from AppLovin, it is being referred to as a merger instead.

Market reaction to the announcement has been mixed, with the morning trading session seeing AppLovin falling by 9.9 per cent while Unity stock rose by one per cent. Meanwhile, IronSource stock fell 9.7 per cent.

AppLovin CEO Adam Foroughi states that the combined company could potentially generate an adjusted operating profit of over $3 billion by the end of 2024.

Last year, we listed both AppLovin and IronSource in our top 50 game makers.