AppLovin withdraws its $20 billion takeover of gaming software giant Unity

In early August, Mobile marketing company AppLovin announced it was acquiring gaming giant Unity Software in a $17.54 billion all-stock deal. The enterprise value of the deal is $20 billion. But a little over a month later, the game developer said it’s giving up on its effort to buy Unity.

AppLovin said on Monday that it won’t submit another proposal to acquire the video game software company after Unity shareholders rejected its $20 billion bid last month.

In a statement, the company said: “Following careful consideration, AppLovin concluded that its path as the independent market leader is better for its stockholders and other stakeholders.”

AppLovin offered $58.85 for each Unity share, which was a premium of about 18% to the previous day’s closing price. Under the proposed deal, Unity would have owned 55% of the combined company’s outstanding shares, representing about 49% of the voting rights. But Unity said the deal was “not in the best interests of Unity shareholders.”

Instead of accepting AppLovin offer, Unity recommended that shareholders vote in favor of its own $4.4 billion proposed acquisition of mobile advertising technology firm IronSource, which was agreed upon in July.

“We remain excited about the long-term growth potential of our core markets and AppLovin,” said CEO Adam Foroughi in the statement. “Our experienced and dedicated team will continue to focus on what we can control, including continual improvements to our products and technology and expanding into newer high-growth markets.”

Founded in 2012 by CEO Adam Foroughi, John Krystynak, and Andrew Karam, AppLovin started out as a mobile ad business, it now bills itself as “a comprehensive mobile gaming platform for mobile app developers to grow their apps.”

Unity was founded in Denmark in 2004 by David Helgason, Joachim Ante, and Nicholas Francis as Over the Edge Entertainment. The company later changed its name to Unity Technologies in 2007. Unity is the creator of the world’s leading real-time 3D development platform, giving users the most powerful and accessible tools to create, operate, and monetize experiences in the real-time world.

Unity enables developers to create games and other computer-generated entertainment, and its game engine runs thousands of console, mobile, and PC titles. As of 2018, Unity has been used to create 60 percent of augmented reality and virtual reality content. As of 2018, Unity software is used to create more than 50% of all new mobile games.

The 16-year-old gaming giant boasts business from game makers such as EA, Microsoft, and Zynga. Unity is based in San Francisco. It has 3,379 employees as of June 30. Backers include DFJ, Sequoia Capital, and Silver Lake Partners.