Under AppLovin's proposal, Unity's board would have to terminate the deal with app monetization platform ironSource.
On Tuesday, mobile technology company AppLovin offered to acquire Unity for $17.54 billion in an all-stock deal. Under AppLoving's proposal, Unity would have to terminate its deal to merge with ironSource, an AppLovin smaller competitor.
In the proposed deal, Unity's CEO John Riccitiello would take on the role of the CEO of the combined business, while AppLoving CEO Adam Foroughi would become the chief operating officer. According to the deal terms, Unity will own 55% of the combined company representing about 49% of the voting rights.
The proposal comes a few weeks after Unity announced it entered the agreement to merge with app monetization platform ironSource in a deal that values the company at $4.4 billion. According to John Riccitiello, the deal would allow the company to provide more tools for Unity developers to monetize their apps. Meanwhile, the deal with AppLovin would offer similar benefits for creators.
"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.
Unity spokeperson confirmed that the company has received the offer and said that the board will "thoroughly evaluate" it.
However, according to some analysts, it is unlikely that Unity will accept the offer as the proposed price is much under the company's intrinsic value.
"The proposed price for Unity appears well below its intrinsic value, and we would expect Unity to reject it for that reason," an analyst at Wedbush Securities Michael Pachter said. "We think interference with the ironSource acquisition is problematic, and will cause Unity’s board to tread very carefully before agreeing to a sale outright."
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