Filing of Certain Prospectuses and Communications in Connection With Business Combination Transactions (425)
August 09 2022 - 8:12AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2022
AppLovin Corporation
(Exact name of registrant as specified in its charter)
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Delaware |
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001-40325 |
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45-3264542 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer Identification No.) |
1100 Page Mill Road
Palo Alto, California 94304
(Address of principal executive offices, including zip code)
(800) 839-9646
(Registrants telephone number, including area code)
Not Applicable
(Former
name or former address, if changed since last report)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange
on which registered |
Class A common stock, par value $0.00003 per share |
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APP |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of
1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01. Other Events.
On August 9, 2022, AppLovin Corporation (AppLovin) issued a press release announcing that it has submitted a non-binding proposal to combine with
Unity Software Inc. (Unity). A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
No Offer
or Solicitation
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale
of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Additional Information and Where to Find It
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This communication relates to a proposal
that AppLovin has made for a business combination transaction with Unity. In furtherance of this proposal and subject to future developments, AppLovin (and, if a negotiated transaction is agreed to, Unity) may file one or more registration
statements, proxy statements, tender offer statements or other documents with the SEC. This communication is not a substitute for any proxy statement, registration statement, tender offer statement, prospectus or other document AppLovin and/or Unity
may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF APPLOVIN AND UNITY ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT, TENDER OFFER STATEMENT, PROSPECTUS AND/OR OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Any definitive proxy statement(s) or prospectus(es) (if and when
available) will be mailed to stockholders of AppLovin and/or Unity, as applicable. Investors and security holders will be able to obtain free copies of these documents (if and when
available) and other documents filed with the SEC by AppLovin through the website maintained by the SEC at www.sec.gov, and by visiting AppLovins investor relations site at https://investors.applovin.com.
Participants in the Solicitation
This communication is
neither a solicitation of a proxy nor a substitute for any proxy statement or other filings that may be made with the SEC. Nonetheless, AppLovin and its directors and executive officers may be deemed to be participants in the solicitation of proxies
in connection with the proposed transaction. Information about the directors and executive officers of AppLovin is set forth in its proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on April 27, 2022.
These documents can be obtained free of charge from the sources indicated above. Additional information regarding the potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or
otherwise, will be contained in one or more registration statements, proxy statements, tender offer statements or other documents filed with the SEC if and when they become available.
Item 9.01 Financial Statements and Exhibits
(d)
Exhibits:
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99.1 |
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Press Release, dated August 9, 2022 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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APPLOVIN CORPORATION |
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Date: August 9, 2022 |
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/s/ Herald Chen |
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Herald Chen |
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Chief Financial Officer |
Exhibit 99.1
AppLovin Submits a Compelling
Non-Binding Proposal to Combine with Unity
Combination of industrys leading platforms would deliver optimal shareholder
value and create an unprecedented full stack solution for developers
to create, monetize, measure and grow games
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Comprehensive full-stack set of integrated industry-leading solutions including real-time 3-D creation tools, analytics, user acquisition, monetization, attribution and programmatic ad exchange |
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Scaled operations and cash flow, targeting combined run-rate revenue of
over $7 billion and run-rate Adjusted EBITDA of over $3 billion by the end of 2024E |
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Estimated synergies of over $700 million Adjusted EBITDA achieved in 2025E, with a minimum of
$500 million in 2024E, based on accelerated revenue opportunities, operational efficiencies and scale benefits |
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All-stock merger consideration payable in a mix of AppLovin Class A
and Class C common stock would value Unity at $58.85 per share and $20 billion enterprise value, representing a 48% premium to the Unity share price as of 7/12/2022 and 18% to yesterdays closing price (based on the closing price of
AppLovins Class A common stock on 8/8/2022) |
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AppLovin confirms 2022E guidance for Adjusted EBITDA midpoint of $1.2 billion and Software Platform revenue
of $1.14 to $1.29 billion and is lowering the Apps revenue range to $1.70 to $1.85 billion |
PALO ALTO(BUSINESS
WIRE) AppLovin (NASDAQ: APP) today announced it has submitted a compelling non-binding proposal to the Board of Directors of Unity Software Inc. (NYSE: U) to combine AppLovin, a leader in mobile
marketing and monetization, with Unity, an industry leading platform for creating and operating interactive, real-time 3D (RT3D) content, in a transaction where each outstanding share of Unity common stock would be exchanged for 1.152 shares of
AppLovin Class A voting common stock and 0.314 shares of AppLovin Class C non-voting common stock.1 Under these terms, current Unity shareholders
would receive approximately 55.0% of the outstanding shares of the combined company, with the Class A shares representing approximately 49.0% of the outstanding voting rights of the combined company. Together the combined business would be
poised to offer the most comprehensive and fully integrated creation and growth platform for app developers.
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Exchange ratios based on capitalization information disclosed in the Unity / ironSource merger agreement and
subject to change to achieve the stated ownership percentages based on any change in capitalization between now and signing. |
We believe that together, AppLovin and Unity create a market leading business that has tremendous
growth potential that would generate an estimated run-rate Adjusted EBITDA of over $3 billion by the end of 2024 and would be in the best interest of shareholders of both companies, said Adam
Foroughi, AppLovin CEO. Over the last decade we have built and operated a leading and innovative company in mobile app marketing and monetization solutions. Unity is one of the worlds leading platforms for helping creators turn their
inspirations into real-time 3D content. With the scale that comes from unifying our leading solutions and innovation that would be achieved with the combination of our teams, we expect that game developers would be the biggest beneficiaries as they
continue to lead the mobile gaming sector to its next chapter of growth.
The combination of the two businesses would expect to generate substantial
revenue growth, cash flow and operational efficiencies that are well beyond each companys potential standalone performance. AppLovin estimates this combination will create over $700 million of Adjusted EBITDA from synergies in 2025E, with
a minimum of $500 million in 2024E. Given AppLovins track record as a leader in the growth and monetization space for app developers the company believes it is better positioned than any other company to develop an end-to-end platform with Unity. AppLovin runs their Software business at a high margin and believes there would be substantial infrastructure savings and other efficiencies of
scale for the combined Growth business. The cash flow benefits of running a large, scaled combined Growth business can be reinvested in the Create Solutions business, which AppLovin views as cornerstone of its joint strategic advantage.
Unitys audience reach through games built on Create Solutions paired with AppLovins 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. 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.
Delivers significant value to shareholders of both companies
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Scale: Approximately $35 billion combined market cap enterprise which offers greater reach and
market presence with more than $7 billion in estimated run-rate revenue and over $3 billion run-rate Adjusted EBITDA by the end of 2024E |
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Synergy value creation: AppLovin expects to achieve over $700 million in Adjusted EBITDA
synergies in 2025E, with a minimum of $500 million in 2024E |
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Capacity for strategic investments: Given cash flow profile, the combined entity would be expected
to continue to have the ability to reinvest for growth and take advantage of strategic opportunities as they arise |
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Diverse and liquid shareholder base: The proposed transaction will meaningfully increase the float
and diversification of AppLovins and Unitys shareholder base |
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Shareholder value creation: Given the combined strategic position and industry leadership, leading
to strong top-line growth and cash flow, the proposed combined entity would yield attractive long-term shareholder returns |
Management and Board of Directors
AppLovin proposes that
Unitys CEO John Riccitiello become CEO of the combined business and Adam Foroughi become the COO. The Board of Directors of the combined company would be reconstituted so that Unity would appoint the majority of members, consistent with Unity
shareholders economic stake. The rest of the management team and Board of Directors would be a combination from each company to be mutually determined.
Transaction Details and Timing
Based on this non-binding proposal, existing AppLovin Class B common shares (20:1 votes) would be converted to Class A common shares (1:1 vote) in connection with the closing of the proposed transaction. AppLovin
shareholders would hold approximately 45% of the outstanding common shares of the combined company, including Class C, with such shares representing approximately 51% of the outstanding voting rights of the combined company. Unity stockholders
would receive approximately 55% of the outstanding shares of the combined company, with Class A common shares representing approximately 49% of the outstanding voting rights of the combined company. The rights of holders of AppLovin
Class A common stock and Class C common stock are the same, except with respect to voting. Shares of AppLovin Class C common stock have no voting rights, except as required by law. AppLovins Class C common stock is not
currently listed on Nasdaq. In connection with the proposed transaction, AppLovin expects to apply to list its shares of Class C common stock on the Nasdaq Global Select Market in connection with the proposed combination.
This proposal has the unanimous support of the AppLovin Board of Directors. Pending acceptance by the Unity
Board of Directors, AppLovin is highly confident that its proposed transaction would be completed on a timely basis. The execution of a definitive merger agreement between AppLovin and Unity would be subject to approval by each companys Board
of Directors, the termination of the proposed acquisition of ironSource LTD, and other customary signing conditions. The completion of the transaction would be subject to customary closing conditions, including receipt of required regulatory
approvals and approval of AppLovin and Unity shareholders.
Please join AppLovins earnings call on Wednesday, August 10, 2022 at 2:00 pm PT for
further discussion of this non-binding proposal.
Financial Outlook for 2022E
As AppLovin resets and optimizes the level of investment in the Apps business, the company is lowering the revenue outlook for the Apps portfolio, while
maintaining the targets for the Software Platform revenue and overall Adjusted EBITDA.
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Full-Year 2022 UPDATED |
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Full-Year 2022 PRIOR |
Software
Platform |
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$1.140 - $1.290 Billion |
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$1.140 - $1.290 Billion |
Apps |
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$1.700 - $1.850 Billion |
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$2.000 - $2.150 Billion |
Total Revenue |
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$2.840 - $3.140 Billion |
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$3.140 - $3.440 Billion |
Adjusted EBITDA[1]
(Midpoint) |
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$1.200 Billion |
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$1.200 Billion |
Adjusted EBITDA
Margin |
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37% - 40% |
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Mid-30s |
[1] |
We have not provided the forward-looking GAAP equivalents for forward-looking
non-GAAP metrics, specifically Adjusted EBITDA and Adjusted EBITDA margin, or a GAAP reconciliation as a result of the uncertainty regarding, and the potential variability of, reconciling items such as
stock-based compensation expense. Accordingly, a reconciliation of these non-GAAP guidance metrics to their corresponding GAAP equivalent is not available without unreasonable effort. However, it is important
to note that material changes to reconciling items could have a significant effect on future GAAP results. |
Advisors
J.P. Morgan is serving as AppLovins financial advisor and Wilson Sonsini Goodrich & Rosati is serving as AppLovins legal advisor.
About AppLovin
AppLovins leading marketing
software platform provides app developers with a powerful, integrated set of solutions to solve their mission-critical functions like user acquisition, monetization and measurement. AppLovin is headquartered in Palo Alto, California with several
offices globally.
Source: AppLovin Corp.
About Non-GAAP Financial Measures
To supplement financial information presented in accordance with generally accepted
accounting principles in the United States (GAAP), AppLovin uses certain financial measures that are not prepared in accordance with GAAP, including EBITDA and Adjusted EBITDA. We have not provided the forward-looking GAAP equivalents
for forward-looking non-GAAP metrics, including EBITDA and Adjusted EBITDA, or a GAAP reconciliation as a result of the uncertainty regarding, and the potential variability of, reconciling items such as
stock-based compensation expense. Accordingly, a reconciliation of these non-GAAP guidance metrics to their corresponding GAAP equivalent is not available without unreasonable effort. However, it is important
to note that material changes to reconciling items could have a significant effect on future GAAP results. AppLovins non-GAAP financial measures should be considered in addition to, not as substitutes
for, or in isolation from, measures prepared in accordance with GAAP.
We define Adjusted EBITDA for a particular period as net income (loss) before
interest expense and loss on settlement of debt, other (income) expense (excluding certain recurring items), net, provisionfor (benefit from) income taxes, amortization, depreciation and write-offs and as further adjusted for non-operating foreign exchange (gains) losses, stock-based compensation expense, acquisition-related expense and transaction bonuses, customer acquisition bonuses, loss (gain) on extinguishments of
acquisition-related contingent consideration, lease modification and abandonment of leasehold improvements, and change in the fair value of contingent consideration. Based on their preliminary proxy statement filed with the Securities and Exchange
Commissions on July 29, 2022, Unity defines Adjusted EBITDA as net income, before interest expense, income taxes, depreciation and amortization and excluding the impact of stock-based compensation expense. We define Adjusted EBITDA Margin as
Adjusted EBITDA divided by revenue for the same period.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or AppLovins future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as
can, may, will, should, expect, plan, anticipate, going to, could, intend, target, project,
contemplate, believe, estimate, predict, potential, or continue, or the negative of these words or other similar terms or expressions that concern AppLovins expectations,
strategy, priorities, plans, or intentions. Forward-looking statements in this press release include, but are not limited to, statements regarding AppLovins proposal to combine with Unity, the expected per share exchange ratio payable to Unity
stockholders, the expected synergies and operations of the companies on a combined basis, projected estimates regarding Adjusted EBITDA and AppLovins expectations regarding the financial and operational performance and success of the combined
companies as well as the technology offering of the combined companies and statements regarding AppLovins future financial performance, including AppLovins expected financial results, guidance, long-term goals and growth prospects.
AppLovins expectations and beliefs regarding these matters may not materialize, and actual results are subject to risks and uncertainties, including changes in AppLovins plans or assumptions, that could cause actual results to differ
materially from those projected or expected. These risks include fluctuations in AppLovins results of operations; the outcome of discussions between AppLovin and Unity with respect to a proposed transaction, including the possibility that the
parties may not agree to pursue a business combination or that the terms of any transaction will be materially different from those described herein; AppLovins ability to consummate the proposed combination or achieve the expected synergies
and/or efficiencies; potential regulatory delays; the industry and market reaction to AppLovins proposal to combine with Unity; the possibility that the integration of Unity may be more difficult, time-consuming or costly than expected or that
operating costs and business disruptions may be greater than expected; changes in the overall economic conditions; AppLovins ability to attract new clients; AppLovins ability to maintain and scale its technical infrastructure; risks
related AppLovins review of its Apps business; and AppLovins ability to adapt to emerging technologies and business models. The forward-looking statements contained in this press release are also subject to other risks and uncertainties,
including those more fully described in AppLovins Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2022. Additional information will also be set forth in AppLovins Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022. The forward-looking
statements in this press release are based on information available to AppLovin as of the date hereof, and AppLovin disclaims any obligation to update any forward-looking statements, except as required by law.
No Offer or Solicitation
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in
any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
This press release is also not a solicitation of a proxy nor
a substitute for any proxy statement or other filings that may be made with the SEC. Nonetheless, AppLovin and its directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers of AppLovin is set forth in its proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on April 27, 2022. These documents can be obtained
free of charge from the sources indicated above. Additional information regarding the potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in
one or more registration statements, proxy statements, tender offer statements or other documents filed with the SEC if and when they become available.
Additional Information and Where to Find It
This press
release relates to a proposal that AppLovin has made for a business combination transaction with Unity. In furtherance of this proposal and subject to future developments, AppLovin (and, if a negotiated transaction is agreed to, Unity) may file one
or more registration statements, proxy statements, tender offer statements or other documents with the SEC. This press release is not a substitute for any proxy statement, registration statement, tender offer statement, prospectus or other document
AppLovin and/or Unity may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF APPLOVIN AND UNITY ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT, TENDER OFFER STATEMENT, PROSPECTUS AND/OR
OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Any definitive proxy statement(s) or prospectus(es) (if and when available)
will be mailed to stockholders of AppLovin and/or Unity, as applicable. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC by AppLovin through the
website maintained by the SEC at www.sec.gov, and by visiting AppLovins investor relations site at https://investors.applovin.com.
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