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AppLovin Proposes Acquisition of Video Game Software Firm Unity.

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Vincent

MANews-(C)2009-2022

California-based mobile marketing and monetization specialist AppLovin (NASDAQ: APP) has submitted a compelling non-binding proposal to the board of directors of interactive, real-time 3D content platform Unity Software Inc. (NYSE: U) to combine the companies, the company said.

The Unity engine has been used to create a number of popular games, including "Call of Duty: Mobile," and "Pokemon Go".

The transaction would involve each outstanding share of Unity common stock would be exchanged for 1.152 shares of AppLovin class A voting common stock and 0.314 shares of AppLovin Class C non-voting common stock.

The all-stock merger consideration is payable in a mix of AppLovin Class A and Class C common stock, and would value Unity at USD 58.85 per share and USD 20bn enterprise value, representing a 48% premium to the Unity share price as of 7/12/2022 and 18% to the August 8 closing price (based on the closing price of AppLovin's Class A common stock on 8/8/2022).

Under these terms, current Unity shareholders would receive approximately 55% of the outstanding shares of the combined company, with the class A shares representing approximately 49% of the outstanding voting rights of the combined company.

The combination of the two businesses would expect to generate substantial revenue growth, cash flow and operational efficiencies that are well beyond each company's potential standalone performance.

AppLovin estimates this combination will create over USD 700m of Adjusted EBITDA from synergies in 2025E, with a minimum of USD 500m in 2024E.

AppLovin proposes that Unity's CEO John Riccitiello become CEO of the combined business and Adam Foroughi become the COO.

The board of directors of the combined company would be reconstituted so that Unity would appoint the majority of members, consistent with Unity shareholders' economic stake. The rest of the management team and board of directors would be a combination from each...

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