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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 a premium of 18 percent compare to what Unity closed at on Monday afternoon and a 48 premium over share prices as of July 12.
Specifically, each share of Unity common stock would be exchanged for 1.152 shares of AppLovin Class A voting common stock and 0.314 shares of AppLovin Class C non-voting common stock.
Should the deal materialize, Unity shareholders would receive about 55 percent of the outstanding shares of the combined company. The total enterprise value of the deal is around $20 billion.
AppLovin CEO Adam Foroughi believes the combined company would have tremendous growth potential, and could generate estimated earnings of over $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 at COO. The board of directors would also be realigned to allow Unity to appoint the majority of members, consistent with its economic stake.
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 gaming publishing studio called Lion Studios.
The offer highlights an ongoing effort to consolidate the gaming industry through mega mergers. In late 2020, Microsoft agreed to buy ZeniMax for $7.5 billion and Take-Two Interactive scooped up developer Zynga for $12.7 billion this past January. A week later, Microsoft announced a monster $68.7 billion buyout of Activision Blizzard. Sony responded by purchasing Bungie for $3.6 billion.
Regulators from the US and the UK are taking a close look at Microsoft's planned purchase of Activision Blizzard to ensure it does not violate any anti-competitive practices. The CMA's investigation will put the acquisition on ice until at least September 1 but the FTC's examination could drag things out well beyond that deadline.