By Sam Boughedda
On Wednesday, before the open, Unity Software Inc (NYSE:U) announced a deal to acquire ironSource (NYSE:IS) in an all-stock transaction valued at $4.4bn.
The deal will see each ordinary share of ironSource exchanged for 0.1089 shares of Unity common stock. Once closed, current Unity stockholders will own approximately 73.5%, and current ironSource shareholders will own around 26.5% of the combined company.
Unity also provided initial commentary on its second-quarter results, updated its 2022 top-line estimates, announced a share buyback program, and disclosed a convertible note commitment of $1bn from Silver Lake and Sequoia to be issued at the closing of the transaction.
Unity said it expects to report slightly higher than expected second-quarter results but reduced its top-line outlook due to current macro trends.
Following the news, Stifel released a note stating they are adjusting estimates accordingly but are "awaiting the closing of the transaction to include the impact of the deal," which is expected to close in Unity's fourth quarter. Stifel maintained a Buy rating on the stock, reducing its price target from $100 to $60 per share.
"ironSource is a leading provider of app monetization, user acquisition, gaming services, and publishing tools for the app economy. The combination of the two businesses has the potential to drive deeper overlap between the Create and Operate segments of Unity. ironSource's expertise in user acquisition and monetization offers game developers insights into the success of a game both prior to and once it has been launched, and the combined company will offer a fully synergized model of creators, user acquisition experts, and operators utilizing a single platform and data set," said Stifel.
"The combined data of these two companies will power Unity's machine learning system to drive customer success through enhanced analytics and scale," they added.
The deal has seen ironSource shares jump over 51% Wednesday, while Unity is trading 16% below Tuesday's close.