– Transformative combination forms the
industry’s first end-to-end platform to power creators’ success as
they build, run, manage, grow, and monetize live games and
real-time, 3D content –
- Highly accretive merger is expected to deliver a run rate of $1
billion in Adjusted EBITDA by the end of 2024, and $300 million in
annual EBITDA synergies by year three.
- All-stock transaction values ironSource at approximately $4.4
billion, representing a 74% premium to the 30-day average exchange
ratio.
- Unity Board authorizes a share buyback program of up to $2.5
billion effective upon closing of the transaction.
- Silver Lake and Sequoia, the two largest Unity shareholders,
have committed to investing an aggregate $1 billion in Unity in the
form of convertible notes to be issued at closing of the
transaction.
- ironSource reaffirms second quarter and full-year 2022 guidance
provided during its first quarter earnings call; Unity expects
second quarter financial results to be slightly higher than the top
end of the guidance range provided during its first quarter
earnings call; Unity reduces full-year 2022 revenue guidance from
$1,350 - $1,425 million to $1,300 - $1,350 million.
Unity (NYSE: U), the world’s leading platform for creating and
operating interactive, real-time 3D (RT3D) content, and ironSource,
(NYSE: IS), a leading business platform that empowers mobile
content creators to turn their apps into scalable, successful
businesses, announced today that they have entered into a
definitive agreement under which ironSource will merge into a
wholly-owned subsidiary of Unity via an all-stock deal, where each
ordinary share of ironSource will be 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 approximately 26.5% of the combined company. The companies’
complementary offerings create a unique end-to-end platform that
allows creators to create, publish, run, monetize, and grow live
games and RT3D content seamlessly.
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the full release here:
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Unity Announces Merger Agreement with
ironSource (Graphic: Business Wire)
“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. “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.”
The end-to-end platform synergy from the combination of the
companies will enhance Unity’s offerings for creators of all sizes.
Together with ironSource, Unity will transform and streamline how
live games, RT3D apps and services are made by turning today’s
linear creation and growth process into a deeply connected and
interactive one. By integrating creation and growth more tightly,
creators will be able to leverage data on audience feedback to
improve content from the earliest stage in the creation process,
and throughout the content lifecycle. This will unlock a flywheel
where data from growth feeds improvements in content which in turn
drives more business success for the content or app.
“To succeed today, creators need an extensive set of solutions
and products working in concert to power amazing user experiences
and sustainable business growth,” said Tomer Bar-Zeev, CEO of
ironSource. “The combination of Unity and ironSource brings
together every product needed to power that flywheel of growth, in
a differentiated platform positioned to lead our category and
beyond. We couldn’t be more excited about our shared mission to
remove obstacles for creators to grow."
The deal will bring together the Unity game engine and editor,
Unity Ads, and the rest of Unity Gaming Services (UGS) with
ironSource’s best-in-class mediation and publishing platforms,
giving developers a seamless and interoperable way to create, grow,
and monetize their creations across their lifecycle. In the near
term, ironSource's mediation platform will leverage the combined
strength of the two companies' ad networks to deliver increased
user reach and data scale, and provide an increased return on ad
spend to advertisers. Telcos will also benefit from the combination
of Unity and ironSource, which will provide them with enhanced
opportunities to leverage interactive gaming and RT3D experiences
on-device.
In addition to delivering benefits for creators, this
transaction also provides significant benefits to shareholders. The
combined company is expected to generate a run rate of $1 billion
in Adjusted EBITDA by the end of 2024.
In connection with the merger, Unity’s Board of Directors have
also authorized a 24-month share buyback program of up to $2.5
billion, effective upon closing of the merger, which is expected to
reduce dilution caused by the transaction.
Silver Lake and Sequoia have fully committed to purchase an
aggregate of $1 billion in convertible notes from Unity at closing,
demonstrating their belief in the value creation potential of the
merger. The convertible notes to be issued to Silver Lake and
Sequoia are due in 2027 and bear an interest rate of 2% per annum.
The conversion price is $48.89 per share.
"Beyond our platform, we expect the combination of our business
with ironSource to transform Unity’s financial profile to that of a
highly profitable and free cash flow positive company," said Luis
Visoso, CFO, Unity. “We expect to generate $300 million in annual
EBITDA synergies by year three.”
Management and Board of Directors
Upon closing of the merger, Tomer Bar-Zeev will join Unity’s
Board of Directors and serve as a key member of Unity’s executive
leadership team. In addition, two additional ironSource Directors
will join the Unity Board of Directors upon closing of the
transaction. Bar-Zeev and other members of ironSource's management
team, who will also assume leadership roles in the combined
company, have an established track record of building a profitable,
high-growth leader in the global app economy. ironSource's
headquarters in Israel will serve as an additional global hub for
Unity.
Additional Transaction Details
The proposed all-stock transaction has been approved by the
boards of directors of both companies, is expected to close during
Unity’s fourth quarter of 2022 and is subject to customary closing
conditions, and regulatory and shareholder approval. Additional
details and information about the terms and conditions of the
transaction will be available in Current Reports on Form 8-K or
Form 6-K, as applicable, to be filed by Unity and ironSource with
the Securities and Exchange Commission.
Advisors
Morgan Stanley served as lead financial advisor to Unity.
Goldman Sachs also served as financial advisor to Unity, and
Morrison & Foerster LLP and Herzog Fox & Neeman served as
its legal advisors. Jefferies LLC served as exclusive financial
advisor to ironSource, and Latham & Watkins LLP and Meitar Law
Offices served as its legal advisors.
Preview of Financial Results and Guidance
In connection with the merger announcement, ironSource reaffirms
second quarter and full-year 2022 guidance provided during its
first quarter 2022 earnings call.
Unity management expects its second quarter financial results to
be slightly higher than the top end of the guidance range provided
during its first quarter earnings call. Unity’s Create business
continues to perform strongly and the company’s data and
engineering interventions in Operate are resulting in improved
performance. While Unity expects ongoing strong performance in
Create, and continued progress in Operate, it is adjusting its
full-year revenue guidance from $1,350 - $1,425 million to $1,300 -
$1,350 million to reflect our current assessment of macro trends,
product launch and competitive dynamic with our monetization
business.
Conference Call and Webcast Details
Unity will hold a conference call for the financial community at
8:00 AM ET (5:00 AM PT) today to discuss plans to join forces with
ironSource. Unity will provide a real-time audio broadcast of the
teleconference on the Investor Relations page of its website at
investors.unity.com.
About Unity
Unity is the world’s leading platform for creating and operating
interactive, real-time 3D content. Our platform provides a
comprehensive set of software solutions to create, run, and
monetize interactive, real-time 2D and 3D content for mobile
phones, tablets, PCs, consoles, and augmented and virtual reality
devices. We serve customers of all sizes, at every stage of
maturity, from individual creators to large enterprises. For more
information, visit Unity.com.
About ironSource
ironSource is a leading business platform for the App Economy.
App developers use ironSource's platform to turn their apps into
successful, scalable businesses, leveraging a comprehensive set of
software solutions which help them grow and engage users, monetize
content, and analyze and optimize business performance to drive
more overall growth. The ironSource platform also empowers telecom
operators to create a richer device experience, incorporating
relevant app and service recommendations to engage users throughout
the lifecycle of the device. By providing a comprehensive business
platform for the core constituents of the App Economy, ironSource
allows customers to focus on what they do best, creating great apps
and user experiences, while enabling their business expansion in
the App Economy. For more information please visit www.is.com
About Non-GAAP Financial Measures
To supplement our consolidated financial statements prepared and
presented in accordance with generally accepted accounting
principles in the United States (GAAP) we use certain non-GAAP
performance financial measures, including Adjusted EBITDA and
EBITDA, to evaluate our ongoing operations and for internal
planning and forecasting purposes. We define Adjusted EBITDA as net
income, less income taxes, interest expense, depreciation and
amortization and stock-based compensation expense. We define EBITDA
as Earnings before Interest, Taxes, Depreciation and Amortization.
We believe Adjusted EBITDA and EBITDA are useful in evaluating our
operating performance. However, non-GAAP financial measures have
limitations in their usefulness to investors because they have no
standardized meaning prescribed by GAAP and are not prepared under
any comprehensive set of accounting rules or principles. In
addition, other companies, including companies in our industry, may
calculate similarly-titled non-GAAP financial measures differently
or may use other measures to evaluate their performance, all of
which could reduce the usefulness of our non-GAAP financial
measures as tools for comparison. As a result, our non-GAAP
financial measures are presented for supplemental informational
purposes only and should not be considered in isolation or as a
substitute for our consolidated financial statements presented in
accordance with GAAP.
Cautionary Statement Regarding
Forward-Looking Statements
This communication includes forward-looking statements. These
forward-looking statements generally can be identified by phrases
such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,”
“estimates” or other words or phrases of similar import. These
statements are based on current expectations, estimates and
projections about the industry and markets in which Unity (“Unity”)
and ironSource (“ironSource”) operate and management’s beliefs and
assumptions as to the timing and outcome of future events,
including the transactions described in this communication. While
Unity’s and ironSource’s management believe the assumptions
underlying the forward-looking statements are reasonable, such
information is necessarily subject to uncertainties and may involve
certain risks, many of which are difficult to predict and are
beyond management’s control. These risks and uncertainties include,
but are not limited to the expected timing and likelihood of
completion of the proposed transaction, including the timing,
receipt and terms and conditions of any required governmental and
regulatory approvals of the proposed transaction; the occurrence of
any event, change or other circumstances that could give rise to
the termination of the merger agreement; the outcome of any legal
proceedings that may be instituted against the parties and others
following announcement of the merger agreement; the inability to
consummate the transaction due to the failure to obtain the
requisite stockholder approvals or the failure to satisfy other
conditions to completion of the transaction; risks that the
proposed transaction disrupts current plans and operations of Unity
and ironSource; the ability to recognize the anticipated benefits
of the transaction, including anticipated synergies; the amount of
the costs, fees, expenses and charges related to the transaction;
Unity’s expected stock buyback occuring as planned or at all;
Unity’s ability to meet revised financial guidance; and the other
risks and important factors contained and identified in Unity’s and
ironSource’s filings with the Securities and Exchange Committee
(“SEC”), such as Unity’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2021 and subsequent Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, and ironSource’s Annual
Report on Form 20-F for the fiscal year ended December 31, 2021 and
subsequent Current Reports on Form 6-K, any of which could cause
actual results to differ materially from the forward-looking
statements in this communication.
There can be no assurance that the proposed transaction will in
fact be consummated. We caution investors not to unduly rely on any
forward-looking statements. The forward-looking statements speak
only as of the date of this press release. Neither Unity nor
ironSource is under any duty to update any of these forward-looking
statements after the date of this communication, nor to conform
prior statements to actual results or revised expectations, and
neither Unity nor ironSource intends to do so.
Important Information for Investors and
Stockholders
In connection with the proposed transaction, Unity expects to
file with the SEC a registration statement on Form S-4 that will
include a joint proxy statement of Unity and ironSource that also
constitutes a prospectus of Unity, which joint proxy
statement/prospectus will be mailed or otherwise disseminated to
Unity’s and ironSource’s respective shareholders, as applicable,
when it becomes available. Unity and ironSource also plan to file
other relevant documents with the SEC regarding the proposed
transaction. INVESTORS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION.
Investors and shareholders may obtain free copies of the
registration statement and the joint proxy statement/prospectus (if
and when it becomes available) and other relevant documents filed
by Unity and ironSource with the SEC at the SEC’s website at
www.sec.gov. Copies of the documents filed by the companies will be
available free of charge on their respective websites at
www.unity.com and www.is.com.
Participants in
Solicitation
Unity, ironSource and their respective directors and executive
officers may be considered participants in the solicitation of
proxies in connection with the proposed transaction. Information
about the directors and executive officers of Unity is set forth in
its proxy statement for its 2022 annual meeting of stockholders,
which was filed with the SEC on April 20, 2022. Information about
the directors and executive officers of ironSource is set forth in
its Annual Report on Form 20-F for the fiscal year ended December
31, 2021, which was filed with the SEC on March 30, 2022. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote of approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220713005473/en/
Ryan M. Wallace Unity Communications
ryan.wallace@unity3d.com
Melissa Zeloof ironSource Communications
melissa@ironsource.com
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