Gaming software company AppLovin has offered $17.54 billion USD for Unity Software, which developed the engine that runs popular app games like Pokemon Go and Call of Duty: Mobile.

The news was initially reported by Reuters, which explained that AppLovin wished to acquire Unity after they discovered that the company cut a deal to purchase the company ironSource for $4.4 billion USD. ironSource, like AppLovin, is a software group that focuses primarily on developing tech for app monetization and distribution, and one of the conditions of AppLovin's offer is that Unity would have to terminate its deal with ironSource.

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AppLovin has proposed an all-stock deal, offering $58.85 USD for shares of Unity stock. That price represents an 18% premium on Monday's closing stock price for Unity, which was approximately $49.76 USD per share. If Unity accepts, they would own about 55% of the merged company's shares, and represent 49% of the voting rights. John Riccitiello, Unity's Chief Executive, would become CEO while AppLovin's current Chief Executive, Adam Foroughi, would become the COO, or Chief Operating Officer, which is typically the second highest-ranking position in a company.

Opinions on the proposed deal have been offered by analysts such as Michael Pachter of Wedbush Securities, who provided his perspective to Reuters. "The proposed price for Unity appears well below its intrinsic value, and we would expect Unity to reject it for that reason," Pachter said. The analyst also mentioned that any interference with the previously made ironSource deal is "problematic" and would cause Unity to "tread very carefully before agreeing to a sale outright." As of Aug. 9, Unity still has not stated whether they will accept or decline AppLovin's offer.

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Although AppLovin focuses mainly on helping mobile developers to monetize their apps, in recent years they have expanded into the world of game publishing. The company has partnered with several mobile game studios, including Machine Zone, which has developed several hit titles, including Game of War, Mobile Strike, and the mobile version of Final Fantasy XV. Some of the company's other mobile gaming partners include Forever9 Games, Lion Studios and Leyi Games.

While many mobile titles running on the Unity engine have become successful, Pokémon Go and Call of Duty: Mobile in particular garnered highly enthusiastic followings and impressive profit margins. Pokémon Go has generated about $1 billion a year since its 2016 launch, while CoD: Mobile has been downloaded over 500 million times and generated roughly $1.5 billion USD in microtransactions since its launch in 2019.

Source: Reuters