Israeli app monetization developer ironSource and US 3D computer games platform Unity Software are moving forward with their merger, after Unity dismissed an offer two weeks ago from AppLovin for a merger, on condition that it canceled its merger with ironSource. At the end of last week, Unity filed a detailed document with the US Securities and Exchange Commission (SEC) calling for a shareholders' meeting of the two companies to approve the merger, although no date for the meeting has yet been set.
The two companies announced the merger in mid-July, which gave ironSource a valuation of $4.4 billion, a 74% premium above its average share price in the 30 days before the deal was reported, although 57% below the value it began trading on the New York Stock Exchange (NYSE) in July 2021. The current value of Unity's shares reflect a value of $4.85 billion for ironSource.
In the SEC report, Unity says it plans issuing a 27.3% holding to ironSource shareholders in the merged company (26.5% in full dilution). The balance will be held by Unity's existing shareholders. In the event of the merger being cancelled, the company initiating the cancellation will be required to pay the other a $150 million fine. Moreover, if the cancellation follows the failure of the shareholders of one of the companies to approve the merger, up to an additional $20 million for the expenses of the merger.
Rivals at play
Earlier this month, US ad app company AppLovin, a rival of ironSource, offered to buy Unity at a premium of 18% on its share price, on condition that the Unity-ironSource merger was canceled. But Unity's board of directors decided to prefer the ironSource merger deal.
Last week AppLovin's investment bank J.P. Morgan asked Unity's bankers Morgan Stanley and Goldman Sachs, if "there was any appetite for a revised offer" but were told that the matter cannot be discussed under the conditions of the merger, and no new terms were presented for an AppLovin deal.