The story began with Unity and ironSource announcing a planned merger. As this would give competitor ironSource direct access to Unity’s client base, AppLovin decided to attempt an acquisition of Unity – on the condition that Unity scupper the planned merger.
This offer would have seen Unity CEO John Riccitiello become the CEO of the combined entity, while existing Unity shareholders would have 49 per cent of voting rights in contrast to AppLovin shareholders’ 51 per cent.
Unity rejected the acquisition, stating that it wasn’t in the best interest of shareholders. Although several analysts stated that AppLovin is in a position to up its offer should it choose to, it appears that the company has conceded defeat. The company has formally withdrawn its acquisition offer and decided against submitting a new one.
“We remain excited about the long-term growth potential of our core markets and AppLovin,” said AppLovin CEO and co-founder Adam Foroughi. “Our experienced and dedicated team will continue to focus on what we can control, including continual improvements to our products and technology and expanding into newer high-growth markets.”
Rather than pursue the acquisition, AppLovin will instead focus on improving the services it offers.
“Enhancements to its core technology are the biggest catalyst of AppLovin’s top-line growth and key drivers of its profitability and cash flow generation. The company will continue to develop its market-leading solutions and create innovative new capabilities that expand its TAM in large and growing categories such as connected TV (CTV), and with new offerings for OEMs. While these initiatives will take time to meaningfully impact revenues, they provide long-term growth opportunities and will allow the company to expand the use cases for its core technology.”
“AppLovin believes by focusing on enhancements and making the right investments now, it will be poised to emerge from the current market volatility in an even stronger position.”
Unity reaffirmed its commitment to the ironSource merger, and has set the date for the shareholder’s vote on the merger. While it’s possible either company could still back out of the merger, doing so would come with a significant financial penalty, and as such this remains unlikely.
In response to the withdrawal of the offer, Unity's stock prices fell ten per cent today, reports Reuters. Shares in both AppLovin and ironSource also fell by 5 per cent and 4 per cent, respectively, reflecting the greater macroeconomic issues such as market weakness and rising inflation.
Last month, we listed Unity as one of the top 50 mobile game makers of 2022.