Unity Announces Merger Agreement with ironSource
Unity and ironSource have announced a transformative merger to create the industry's first end-to-end platform for live games and real-time 3D (RT3D) content. The all-stock deal, valuing ironSource at approximately
- Merger expected to generate
$1 billion in Adjusted EBITDA by end of 2024. - Projected
$300 million in annual EBITDA synergies by year three. - Unity's Board has authorized a
$2.5 billion share buyback program to mitigate dilution. - Strong backing from major shareholders (Silver Lake and Sequoia) committing
$1 billion in convertible notes.
- Unity has reduced its full-year 2022 revenue guidance from
$1,350 -$1,425 million to$1,300 -$1,350 million due to macro trends.
– Transformative combination forms the industry’s first end-to-end platform to power creators’ success as they build, run, manage, grow, and monetize live games and real-time, 3D content –
-
Highly accretive merger is expected to deliver a run rate of
in Adjusted EBITDA by the end of 2024, and$1 billion in annual EBITDA synergies by year three.$300 million -
All-stock transaction values ironSource at approximately
, representing a$4.4 billion 74% premium to the 30-day average exchange ratio. -
Unity Board authorizes a share buyback program of up to effective upon closing of the transaction.$2.5 billion -
Silver Lake andSequoia , the two largest Unity shareholders, have committed to investing an aggregate in Unity in the form of convertible notes to be issued at closing of the transaction.$1 billion -
ironSource reaffirms second quarter and full-year 2022 guidance provided during its first quarter earnings call; Unity expects second quarter financial results to be slightly higher than the top end of the guidance range provided during its first quarter earnings call; Unity reduces full-year 2022 revenue guidance from
-$1,350 to$1,425 million -$1,300 .$1,350 million
Unity Announces Merger Agreement with ironSource (Graphic: Business Wire)
“We believe the world is a better place with more successful creators in it. The combination of Unity and ironSource better supports creators of all sizes by giving them all the tools they need to create and grow successful apps in gaming and other consumer-facing verticals like e-commerce,” said
The end-to-end platform synergy from the combination of the companies will enhance Unity’s offerings for creators of all sizes. Together with ironSource, Unity will transform and streamline how live games, RT3D apps and services are made by turning today’s linear creation and growth process into a deeply connected and interactive one. By integrating creation and growth more tightly, creators will be able to leverage data on audience feedback to improve content from the earliest stage in the creation process, and throughout the content lifecycle. This will unlock a flywheel where data from growth feeds improvements in content which in turn drives more business success for the content or app.
“To succeed today, creators need an extensive set of solutions and products working in concert to power amazing user experiences and sustainable business growth,” said
The deal will bring together the Unity game engine and editor, Unity Ads, and the rest of Unity Gaming Services (UGS) with ironSource’s best-in-class mediation and publishing platforms, giving developers a seamless and interoperable way to create, grow, and monetize their creations across their lifecycle. In the near term, ironSource's mediation platform will leverage the combined strength of the two companies' ad networks to deliver increased user reach and data scale, and provide an increased return on ad spend to advertisers. Telcos will also benefit from the combination of Unity and ironSource, which will provide them with enhanced opportunities to leverage interactive gaming and RT3D experiences on-device.
In addition to delivering benefits for creators, this transaction also provides significant benefits to shareholders. The combined company is expected to generate a run rate of
In connection with the merger, Unity’s Board of Directors have also authorized a 24-month share buyback program of up to
"Beyond our platform, we expect the combination of our business with ironSource to transform Unity’s financial profile to that of a highly profitable and free cash flow positive company," said
Management and Board of Directors
Upon closing of the merger,
Additional Transaction Details
The proposed all-stock transaction has been approved by the boards of directors of both companies, is expected to close during Unity’s fourth quarter of 2022 and is subject to customary closing conditions, and regulatory and shareholder approval. Additional details and information about the terms and conditions of the transaction will be available in Current Reports on Form 8-K or Form 6-K, as applicable, to be filed by Unity and ironSource with the
Advisors
Morgan Stanley served as lead financial advisor to Unity. Goldman Sachs also served as financial advisor to Unity, and
Preview of Financial Results and Guidance
In connection with the merger announcement, ironSource reaffirms second quarter and full-year 2022 guidance provided during its first quarter 2022 earnings call.
Unity management expects its second quarter financial results to be slightly higher than the top end of the guidance range provided during its first quarter earnings call. Unity’s Create business continues to perform strongly and the company’s data and engineering interventions in Operate are resulting in improved performance. While Unity expects ongoing strong performance in Create, and continued progress in Operate, it is adjusting its full-year revenue guidance from
Conference Call and Webcast Details
Unity will hold a conference call for the financial community at
About Unity
Unity is the world’s leading platform for creating and operating interactive, real-time 3D content. Our platform provides a comprehensive set of software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. We serve customers of all sizes, at every stage of maturity, from individual creators to large enterprises. For more information, visit Unity.com.
About ironSource
ironSource is a leading business platform for the App Economy. App developers use ironSource's platform to turn their apps into successful, scalable businesses, leveraging a comprehensive set of software solutions which help them grow and engage users, monetize content, and analyze and optimize business performance to drive more overall growth. The ironSource platform also empowers telecom operators to create a richer device experience, incorporating relevant app and service recommendations to engage users throughout the lifecycle of the device. By providing a comprehensive business platform for the core constituents of the App Economy, ironSource allows customers to focus on what they do best, creating great apps and user experiences, while enabling their business expansion in the App Economy. For more information please visit www.is.com
About Non-GAAP Financial Measures
To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in
Cautionary Statement Regarding Forward-Looking Statements
This communication includes forward-looking statements. These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. These statements are based on current expectations, estimates and projections about the industry and markets in which Unity (“Unity”) and ironSource (“ironSource”) operate and management’s beliefs and assumptions as to the timing and outcome of future events, including the transactions described in this communication. While Unity’s and ironSource’s management believe the assumptions underlying the forward-looking statements are reasonable, such information is necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and are beyond management’s control. These risks and uncertainties include, but are not limited to the expected timing and likelihood of completion of the proposed transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be instituted against the parties and others following announcement of the merger agreement; the inability to consummate the transaction due to the failure to obtain the requisite stockholder approvals or the failure to satisfy other conditions to completion of the transaction; risks that the proposed transaction disrupts current plans and operations of Unity and ironSource; the ability to recognize the anticipated benefits of the transaction, including anticipated synergies; the amount of the costs, fees, expenses and charges related to the transaction; Unity’s expected stock buyback occuring as planned or at all; Unity’s ability to meet revised financial guidance; and the other risks and important factors contained and identified in Unity’s and ironSource’s filings with the
There can be no assurance that the proposed transaction will in fact be consummated. We caution investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this press release. Neither Unity nor ironSource is under any duty to update any of these forward-looking statements after the date of this communication, nor to conform prior statements to actual results or revised expectations, and neither Unity nor ironSource intends to do so.
Important Information for Investors and Stockholders
In connection with the proposed transaction, Unity expects to file with the
Investors and shareholders may obtain free copies of the registration statement and the joint proxy statement/prospectus (if and when it becomes available) and other relevant documents filed by Unity and ironSource with the
Participants in Solicitation
Unity, ironSource and their respective directors and executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Unity is set forth in its proxy statement for its 2022 annual meeting of stockholders, which was filed with the
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220713005473/en/
ryan.wallace@unity3d.com
ironSource Communications
melissa@ironsource.com
Source: Unity
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