Unity Shares Tumble 13% amid Merger Agreement and Lowered Guidance

Unity (NYSE: U), a video game software development company, shares faltered 13% Wednesday morning after it lowered its 2022 guidance and disclosed a merger agreement with ironSource. Meanwhile, ironSource shares skyrocketed 50%.

IronSource is valued at approximately USD4.4 Billion and will be merging into a wholly-owned subsidiary of Unity through an all-stock deal. Both companies believe the merger will be finalized in Q4, and “is expected to generate a run rate of $1 billion in Adjusted EBITDA by the end of 2024,” Unity said.

“We believe the world is a better place with more successful creators in it. The combination of Unity and IronSource better supports creators of all sizes by giving them all the tools they need to create and grow successful apps in gaming and other consumer-facing verticals like e-commerce,” said John Riccitiello, CEO of Unity, in a statement. “This is a step further toward realizing our vision of a fully integrated platform that helps creators in every step of their RT3D journey. We look forward to welcoming Tomer Bar-Zeev, the CEO of ironSource, and the rest of ironSource’s talented team into the Unity family.”

Amid the closure of the deal, Unity stockholders will own about 73.5% of the merged company and ironSource shareholders will be left with the remaining 26.5%. According to Unity, a USD2.5 Billion share buyback program will go into effect when the transaction is finalized.