People play ‘Pokemon GO’ on the Pokequan GoBoat Adventure Cruise in the Occoquan River in the small town of Occoquan, Virginia, U.S. August 14, 2016. Portal/Sait Serkan Gurbuz
Aug 9 (Portal) – Gaming software company AppLovin Corp (APP.O) on Tuesday announced a bid to buy rival Unity Software Inc (UN) in an all-stock deal valued at US$17.54 billion. Dollars given to tap the growing demand for three-dimensional games.
Both companies make software used to design video games. The gaming software has also been extended to 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 like Call of Duty: Mobile and Pokemon Go, while AppLovin helps developers grow and monetize their apps.
The enterprise value of the deal is $20 billion. AppLovin is offering $58.85 for each Unity share, an 18% premium to Unity’s closing price on Monday.
Unity’s shares are up 7%, while AppLovin’s are down 14% before the opening bell.
Under the proposed transaction, Unity will own 55% of the combined company’s outstanding shares, representing approximately 49% of the voting rights.
Adam Foroughi, AppLovin’s chief executive officer, said the combined company has the potential to generate over $3 billion in adjusted operating income 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, Portal reported that Unity was in talks to spin off its Chinese unit to expand into one of the world’s largest video game markets.
Palo Alto, Calif.-based AppLovin, backed by KKR and Co (KKR.N), went public last year, capitalizing on increasing demand for video games from people who are staying at home due to the COVID-19 pandemic.
However, AppLovin’s offering comes as game developers and console makers warn of a slowdown in the sector as decades of inflation and the easing of COVID-19 restrictions prompt gamers to opt for outdoor pursuits.
Reporting by Eva Mathews and Nivedita Balu in Bengaluru; Adaptation by Saumyadeb Chakrabarty
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