AppLovin proposes $20bn deal with Unity, but only if it ditches IronSource merger


Well, we didn’t see this one coming. AppLovin has offered to merge with Unity in a deal valued at $20bn, but only if Unity terminates its agreement to merge with IronSource.  

The new company would have a combined market cap of $35bn, with Unity CEO John Riccitiello taking the helm. AppLovin CEO Adam Foroughi would become COO of the new entity. 

The proposal has the unanimous support of the AppLovin board, so it’s down to the Unity board to accept the offer. The proposed deal is subject to “the termination of the proposed acquisition of ironSource LTD”, the AppLovin statement said.

“We believe that together, AppLovin and Unity create a market leading business that has tremendous growth potential that would generate an estimated run-rate Adjusted EBITDA of over $3 billion by the end of 2024 and would be in the best interest of shareholders of both companies,” said AppLovin CEO Adam Foroughi in a statement.

“With the scale that comes from unifying our leading solutions and innovation that would be achieved with the combination of our teams, we expect that game developers would be the biggest beneficiaries as they continue to lead the mobile gaming sector to its next chapter of growth.”

Some more details from the announcement worth knowing:

  • AppLovin CEO said that together the two companies’ EBITDA could total $3bn by the end of 2024
  • AppLovin expects to achieve over $700m in Adjusted EBITDA synergies in 2025E, with a minimum of $500m in 2024E
  • Unity shareholders would receive approximately 55% of the outstanding shares of the combined company
  • The proposed deal would value Unity stick at $58.85 per share, a 48% premium on the Unity share price as of 12/7/2022 and 18% on yesterday’s closing price
  • As part of the announcement AppLovin adjusted its 2022E guidance for its games division downwards from $1.85bn to $1.7bn

Unity has been in the headlines plenty lately already – firstly for that IronSource deal that now hangs in the balance, and then a few days later when Unity CEO Riccitiello said developers that don’t think about monetisation were “fucking idiots”. He later apologised.

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