Mobile app tech company AppLovin makes $20 billion bid to acquire Unity

TL; DR: Mobile app technology company AppLovin has submitted an unsolicited offer to purchase Unity Software. The all-stock deal would value Unity shares at $58.85 each, representing an 18% premium to Unity’s Monday afternoon close and a 48% premium to July 12 stock price. .

Specifically, each share of Unity common stock would be exchanged for 1.152 Class A voting common stock of AppLovin and 0.314 Class C non-voting common stock of AppLovin.

Should the deal go through, Unity shareholders would receive approximately 55% of the combined company’s outstanding shares. The total enterprise value of the deal is approximately $20 billion.

Adam Foroughi, CEO of AppLovin believes the combined company would have huge growth potential and could generate revenues estimated at more than $3 billion by the end of 2024. AppLovin further proposes that current Unity chief John Riccitiello serve as CEO of the combined company, with Foroughi serving as chief operating officer. The board of directors would also be realigned to allow Unity to appoint the majority of members, consistent with its economic stakes.

AppLovin was founded in 2012 and operated in stealth mode until 2014. The company helps developers market and monetize their apps as well as analyze reach, and they also operate a mobile game publishing studio called Lion Studios.

The offer highlights an ongoing effort to consolidate the gaming industry through mega mergers. At the end of 2020, Microsoft agreed to buy ZeniMax for $7.5 billion, and Take-Two Interactive snapped up developer Zynga for $12.7 billion last January. A week later, Microsoft announced a monstrous takeover of Activision Blizzard for $68.7 billion. Sony responded by buying Bungie for $3.6 billion.

Regulators in the US and UK are closely scrutinizing Microsoft’s proposed purchase of Activision Blizzard to ensure it does not violate any anti-competitive practices. The CMA investigation will put the acquisition on hold until at least September 1, but the FTC’s review could drag things out well beyond that deadline.

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