On Tuesday, gaming software company AppLovin made an offer to buy Unity Software in a $17.54 billion (roughly Rs. 1,39,600 crore) all-stock deal, seeking to leverage the growing demand for three-dimensional games. Both companies make software used to design video games. Game creation software has also expanded into new technologies such as the so-called metaverse, or immersive virtual worlds.
Unity’s software has been used to create some of the most played games such as Call of Duty: Mobile and Pokémon Go, while AppLovin helps developers grow and monetize their apps.
The enterprise value of the deal is $20 billion (about Rs. 1,59,200 crore). AppLovin will offer $58.85 (around Rs 4,700) for each Unity share, representing an 18% premium to Unity’s closing price on Monday.
Shares of Unity rose 7%, while those of AppLovin fell 14% before the opening bell.
Under the proposed deal, Unity will own 55% of the combined company’s outstanding shares, representing approximately 49% of the voting rights.
AppLovin CEO Adam Foroughi said the combined company would have the potential to generate adjusted operating profit of more than $3 billion (about Rs 23,900 crore) by the end of 2024.
“Unity is one of the world’s leading platforms for helping creators turn their inspirations into real-time 3D content,” said Foroughi.
Last week, Reuters reported that Unity was in talks to spin off its China unit to expand into one of the world’s biggest video game markets.
AppLovin, based in Palo Alto, Calif., backed by KKR and Co, went public last year, taking advantage of increased demand for video games from people staying at home due to the COVID-19 pandemic. .
AppLovin’s bid, however, comes as game developers and console makers warn of an industry downturn as decades-high inflation and the easing of COVID-19 restrictions lead gamers to choose outdoor activities.
© Thomson Reuters 2022