ironSource Ltd. (NYSE: IS) operates an app development platform, which enables creators and developers to turn their apps into successful and scalable businesses. Shares of the application development company are rallying 43% through early trading on Wednesday, July 13, 2022. Over the past three months, ironSource has seen average daily volume of 5.97 million shares. However, volume of 120.15 million shares or dollar volume of around $394.09 million, has already exchanged hands through early trading.
Shares of ironSource are surging after the company announced it has entered into a definitive agreement with Unity (NYSE: U), where ironSource will merge with and become a wholly-owned subsidiary of Unity. Under the terms of the transaction, Unity will acquire ironSource in an all-stock deal by offering 0.1089 shares of Unity common stock for each ordinary share of ironSource. This gives the all-stock transaction an approximate value of $4.4 billion.
In conjunction with the merger, Unity’s Board of Directors has authorized a $2.5 billion share repurchase program, which will become effective upon closing of the transaction. Two of Unity’s largest shareholders, Silver Lake and Sequoia, have also committed to investing an additional $1 billion in Unity through convertible notes.
The ironSource-Unity merger would combine Unity’s game engine, editing, advertising offering and services unit with ironSource’s best-in-class mediation and publishing platforms. This gives game developers a full-service approach to creating, growing, monetizing, and expanding their gaming creations throughout its different stages in its lifecycle.
Upon closing, the combined entity would have an annual run rate of $1 billion in adjusted EBITDA by the end of 2024 and an estimated $300 million in annual EBITDA synergies by year three. The transaction is estimated to close during the fourth quarter of 2022, subject to regulatory and shareholder approvals.
“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.”
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