AppLovin Offers To Buy Unity Video Game Software In A Deal Worth $17.5 Billion

People play “Pokemon GO” on a Pokequan GoBoat Adventure Cruise on the Occoquan River in the small town of Occoquan, Virginia, US, August 14, 2016. REUTERS / Sait Serkan Gurbuz

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Aug 9 (Reuters) – Game software company AppLovin Corp (APP.O) On Tuesday submitted an offer to buy a peer Unity Software Inc (United nations) In a $17.54 billion all-share deal, it’s looking to capitalize on the growing demand for 3D games.

Both companies make software that is used to design video games. Game industry programs have also expanded to include new technologies such as the so-called metaverse or immersive virtual worlds.

Unity has been used to build some of the most played games like “Call of Duty: Mobile” and “Pokemon Go”, while AppLovin provides help for developers to grow and monetize their apps.

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The project value of the deal is $20 billion. AppLovin will offer $58.85 per share of Unity stock, which is an 18% premium to Unity’s closing price on Monday.

Unit shares are up 7%, while shares of AppLovin 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.

AppLovin CEO Adam Froggy said the combined company will have the potential to generate adjusted operating profit of more than $3 billion by the end of 2024.

“Unity is one of the leading platforms in the world to help creators turn their inspiration into 3D content in real time,” said Foroughi.

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Last week, Reuters reported that the unit is in talks to separate its China unit to expand into one of the world’s largest video game markets.

Palo Alto, California-based AppLovin, powered by KKR and Co (KKR.N) It was introduced to the public last year, taking advantage of the surge in demand for video games from people 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 high inflation and the easing of cOVID-19 restrictions have led to players choosing to take out outdoor activities.

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Additional reporting by Eva Matthews and Nivedita Balu in Bengaluru; Edited by Somiadb Chakrabarti

Our criteria: Thomson Reuters Trust Principles.

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