Update: AppLovin $17.5 billion Unity bid has been rejected
The game development engine was subject to a bid by AppLovin, but the deal has been rejected
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🤑 AppLovin’s offer to buy Unity Software for $17.5bn has been rejected
💵 Unity will proceed with its deal to acquire ironSource for $4.8bn
📱 Unity’s engine has been used to develop mobile games like Pokémon Go and Call of Duty: Mobile
💪 The engine also powers Fall Guys, Ori and the Will of the Wisp and Cuphead
Update: Unity has announced that it has no intention to accept AppLovin’s $17.5bn proposal, saying the deal is “not in the best interest of Unity shareholders.”
In a press release posted to Unity’s investor relations site, the company said:
“The Unity Board reaffirms its recommendation to Unity’s shareholders to vote in favor of the previously announced ironSource transaction and recommends against the unsolicited AppLovin proposal. The Unity Board is committed to acting in the best interests of Unity shareholds with a focus on driving long-term sustainable value creation.
John Riccitiello, president and chief executive officer of Unity, also said:
“The Board continues to believe that the ironSource transaction is compelling and will deliver an opportunity to generate long-term value through the creation of a unique end-to-end platform that allows creators to develop, publish, run, monetize, and grow live games and real-time 3D content seamlessly. We remain committed to and enthusiastic about Unity’s agreement with ironSource and the substantial benefits it will create for our shareholders and Unity creators.”
Original story: AppLovin wants to buy Unity Software for $17.54 billion in an all-stock deal that probably no one saw coming. AppLovin is a gaming software company specializing in mobile growth, monetization, and data-driven marketing.
As reported by Reuters, AppLovin has offered $58.85 for each Unity share, which is 18% above Unity’s closing share price on Monday.
Unity will have to terminate its pending acquisition of ironSource, a competitor of AppLovin, as part of the proposed deal, which it previously agreed to buy for $4.4 billion last month.
The Unity board is reportedly evaluating the offer after the company reported $297 million in quarterly revenue on Tuesday, a 9% increase year-over-year. However, Unity’s operating loss increased.
Analyst at Wedbush Securities Michael Pachter believes the bid will be rejected due to conflicts with the ironSource takeover and as the offer falls below Unity’s value. Patcher said:
“The proposed price for Unity appears well below its intrinsic value, and we would expect Unity to reject it for that reason. 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.”
A slip of the tongue
Unity has been making headlines recently for all the wrong reasons. The company’s chief executive John Riccitiello angered developers and Unity creators alike by saying those who don’t focus on implementing monetization early on are some of the “biggest f*ing idiots.” Riccitello later apologized for comments on Twitter:
“I'm going to start with an apology. My word choice was crude. I am sorry. I am listening and I will do better.
"What I can do, perhaps, is provide more on what I was thinking when I did the interview. What I would have said if I had taken great care.
“First -- I have great respect for game developers. The work they do is amazing. The creativity can be incredible whether on a AAA console, mobile or indie game, designed to be played by millions. Or a creative project, a game made just for the sheer joy of it.
“Second -- one thing I have seen is that most game devs work incredibly hard and want people to play their game. To enjoy it. And, when appropriate for players to engage deeply. For the game devs I have worked most closely with there is often anxiety about whether players will love the game and appreciate all the work and love that went into making it.
“Third -- Sometimes all a game developer wants is to have a handful of friends enjoy the game. Art for art sake and art for friends. Others want player $ to buy the game or game items so they can make a living. Both of these motivations are noble.
“Fourth -- What I was trying to say, and clearly failed at saying, is that there are better ways for game developers to get an early read on what players think of their game. To learn from their feedback. And, if the developer wants, to adjust the game based on this feedback. It's a choice to listen and act or just to listen. Again, both are very valid choices.
“If I had been smarter in choosing my words I would have just said this... we are working to provide developers with tools so they can better understand what their players think, and it is up to them to act or not, based on this feedback.
“Anyway, that's it. Lots of words. And a sentence that I wish I had never said.”
The proposed takeover of Unity would see Riccitello remain CEO of the combined business, while AppLovin CEO Adam Foroughi would become the company’s COO (chief operating officer).
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Unity is an extremely popular and adaptable game development engine that powers some of the biggest mobile games on the market, including Pokémon Go and Call of Duty: Mobile. The engine is also widely used by independent developers, with games like Fall Guys, Hollowknight, Cuphead, and Ori and the Will of the Wisps all running on Unity.
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Updated: August 15, 2022