Jul 13, 2022 - Economy

Gaming giant Unity buying IronSource for $4 billion

Pokemon Go

Unity's gaming engine is used for Pokémon Go. Photo Illustration: Thiago Prudêncio/SOPA Images/LightRocket via Getty Images

Unity Software, a San Francisco-based interactive gaming engine, agreed to buy Israeli app monetization company IronSource for around $4 billion in stock.

Why it matters: IronSource is the latest in an escalating series of SPAC splats, despite profits and increasing revenue, as it went public just one year ago via a Thoma Bravo-sponsored SPAC at an implied equity value of $11.1 billion.

Details: IronSource shareholders will own around 26.5% of the combined company, with each share valued at $4.33 as of yesterday's closing price for Unity. That's a 94% premium for IronSource shares, but 65% lower than where they were trading last September.

  • Existing Unity shareholders Silver Lake and Sequoia will buy a combined $1 billion of Unity convertible notes at merger close.

The bottom line: Unity is basically Epic without a game (Fortnite) of its own, and has been a voracious acquirer. But it's struggled recently due to mobile ad tech challenges, which is an area where IronSource could help. The timing also could frustrate Unity’s workforce who were hit with hundreds of layoffs, or 4% of its workforce, just two weeks ago.

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