Unity rejected AppLovin's offer to buy the company in an all-stock deal valued at $20 billion and instead will move forward with a plan to buy ad tech and monetization software company ironSource, the company said Monday.
AppLovin offered to buy Unity last week under the condition that Unity give up its $4.4 billion deal with ironSource. The merger with AppLovin would have given Unity 55% of the company's shares but only 49% of the voting rights, and CEO John Riccitiello would have kept the same role.
But Unity said AppLovin's offer wasn't good enough to edge out a deal with ironSource. The company said the deal would not be in the interest of shareholders and "would not reasonably be expected to result in a 'Superior Proposal' as defined in Unity’s merger agreement with ironSource."
"The Board continues to believe that the ironSource transaction is compelling and will deliver an opportunity to generate long-term value," Riccitiello said in a statement. "We remain committed to and enthusiastic about Unity’s agreement with ironSource and the substantial benefits it will create for our shareholders and Unity creators."
Unity expects the combined company will produce a run rate of $1 billion in adjusted EBITDA by the end of 2024. The company will also authorize a 24-month share buyback program of up to $2.5 billion once the deal with ironSource closes.
Unity's transaction with ironSource puts AppLovin at a disadvantage in the digital advertising and gaming markets. AppLovin had been working on a proposal to buy Unity ever since the company announced a deal with ironSource, having hired advisers to work on a bid last month.