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AppLovin Proposes to Buy Unity Software in Deal Valued at $20 Billion

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The all-stock merger would value Unity at $58.85 a share with a $20 billion enterprise value.

David Paul Morris/Bloomberg

App marketing services company


AppLovin

has proposed to buy video gaming company


Unity Software

in an all-stock transaction valued at $20 billion.


U

nder the terms of the deal, each outstanding share of Unity (ticker: U) common stock would be exchanged for 1.152 shares of AppLovin (


APP

) Class A shares and 0.314 Class C shares, meaning Unity shareholders would receive about 55% of the outstanding sharers of the combined company.

The all-stock merger would value Unity at $58.85 a share with a $20 billion enterprise value, representing a 48% premium to Unity’s share price as of July 12.

AppLovin estimates that the combined company could generate more than $7 billion in run-rate revenue by the end of 2024, and more than $3 billion in run-rate adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, during the same time period.

“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,” said AppLovin CEO Adam Foroughi.

Unity stock jumped 9% to $54.30 in premarket trading, while AppLovin tumbled 11 to $35.38%.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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