Marketing platform AppLovin proposes merger with Unity at valuation of $20 billion

Marketing software platform AppLovin has tabled a non-binding proposal to merge with Unity in an all-stock deal that would value the engine maker at $20 billion.

AppLovin claims that in combining with Unity it will be able to "create an unprecedented full stack solution for developers to create, monetize, measure and grow games."

The proposed transaction would see each outstanding share of Unity common stock exchanged for 1.152 shares of AppLovin Class A voting common stock and 0.314 shares of AppLovin Class C non-voting common stock. Proceeding with this deal would require the termination of Unity's proposed merger with app monetization platform IronSource.

"Under these terms, current Unity shareholders would receive approximately 55.0 percent of the outstanding shares of the combined company, with the Class A shares representing approximately 49.0 percent of the outstanding voting rights of the combined company," reads a press release.

"Together the combined business would be poised to offer the most comprehensive and fully integrated creation and growth platform for app developers."

Better together?

AppLovin believes the deal will generate "substantial revenue growth" that simply wouldn't be achievable should each company continue to operate on a standalone basis. The marketing company, which is headquarter in Palo Alto, California, said it's better positioned than any other business to develop an end-to-end platform with Unity.

"Unity’s audience reach through games built on Create Solutions paired with AppLovin’s powerful AXON machine learning engine will create material efficiency gains for the combined growth platform, leading to revenue gains, but even more importantly facilitating materially more value to app developers," continued the company.

"With AppLovin and Unity working in concert, developers would be able to seamlessly take their app from concept to commercialization with continued growth and optimization at far greater scale and effectiveness, which can drive higher growth for the entire mobile app industry and beyond."

When it comes to company leadership, AppLovin is proposing that Unity CEO John Riccitiello becomes CEO of the combined business and AppLovin co-founder and CEO Adam Foroughi be appointed COO. It suggests that the board of directors also be reconstituted so that Unity would appoint the majority of members, with the rest of management to be composed of staff from each company. The proposal currently has the unanimous support of the AppLovin board of directors.

The news comes shortly after Unity announced a merger with IronSource. That deal angered some developers, who raised concerns about IronSource's historic affiliation with malicious adware and Unity's bid to make advertising a core part of its business.

Update 8/9: This story has been updated to reflect that AppLovin's proposal would require Unity to terminate its merger agreement with IronSource.