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Unity Software Inc.’s
U -6.45%
board has unanimously agreed that the $17.5 billion buyout offer from
AppLovin Corp.
APP -6.58%
isn’t in the best interests of shareholders.
Unity on Monday recommended shareholders vote against the AppLovin deal and instead vote in favor of Unity’s planned deal to buy ironSource Ltd. for $4.4 billion, a merger that was agreed upon last month. IronSource runs a platform for publishing and scaling mobile games and other apps.
“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 Chief Executive Officer
John Riccitiello
said.
Last week, AppLovin offered to buy Unity in an all-stock deal valued at $58.85 a share. Under AppLovin’s proposal, Unity shareholders would control 55% of the combined company and appoint a majority of the board but have only 49% of voting rights. The company would be led by Mr. Riccitiello, while AppLovin CEO
Adam Foroughi
would be chief operating officer.
Representatives for AppLovin didn’t immediately return a request for comment.
Shares of Unity fell 7% to $54.38, while AppLovin shares fell 6.7% to $33.89. Shares of ironSource, meanwhile, jumped nearly 12% to $4.49.
IronSource said Monday that it remains committed to its merger with Unity and said it “is confident it will create superior value for shareholders, customers, and employees.”
While some Wall Street analysts said Unity and AppLovin would be complementary to one another, they also expressed skepticism that a deal could work in part because of its requirement that Unity cancel its transaction for ironSource and pay a $150 million breakup fee. Wedbush analyst Michael Pachter also said last week in a note to investors that the price of AppLovin’s offer for Unity “appears well below” Unity’s intrinsic value.
AppLovin makes tools for app developers to improve marketing and revenue generation. Unity operates a platform for developing mobile, console and computer videogames as well as other interactive software applications. Together, they essentially would provide a one-stop shop of tools and resources for mobile-game and other app developers.
—Sarah E. Needleman contributed to this article.
Write to Will Feuer at will.feuer@wsj.com
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