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Unity Announces Merger Agreement with ironSource

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Unity Announces Merger Agreement with ironSource
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Unity, the world’s leading platform for creating and operating interactive, real-time 3D (RT3D) content, and ironSource, a leading business platform that empowers mobile content creators to turn their apps into scalable, successful businesses, announced 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.

“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.

Industry News

Dutch Mental Health Care Calls for Total Ban on Online Gambling Advertising

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The Dutch mental health service is calling for a total ban on online gambling advertisements in the Netherlands.

Although a ban on untargeted gambling advertisements and a ban on the use of role models has been in effect since 2023, a recent research by KRO-NCRV’s Pointer shows that (illegal) gambling companies and sports tipster platforms are still enticing young people via social media such as TikTok and Snapchat.

By using influencers and terms like “free money”, they try to attract a young audience and thus lower the threshold to start gambling. This concerns both legal online casinos and online casinos that do not have a license in the Netherlands. The Gaming Authority has started an investigation based on Pointer’s findings.

Pointer’s research shows that part of the gambling industry deliberately targets young people who are often susceptible to promises such as “fast money” and the influence of role models. Ruth Peetoom, chair of the Dutch mental health service, compares this approach to that of the tobacco industry, where similar marketing strategies were used to get young people to smoke.

Despite the existing advertising ban, gambling companies continue to explore the boundaries of the law, according to Peetoom. The Dutch mental health and addiction care associations in the Netherlands therefore push for a total ban on online gambling advertising and stricter rules for the duty of care of gambling providers.

With the call for a total ban, the Dutch mental health care sector hopes to prevent further normalisation of gambling behaviour among young people and to protect them from the temptation and consequences of online gambling.

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Compliance Updates

UKGC: Market impact data on gambling behaviour – operator data to Oct 2024

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UKGC: Market impact data on gambling behaviour - operator data to Oct 2024
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The Gambling Commission has published further data on the gambling industry in Great Britain.

This data, sourced from operators, reflects the period between March 2020 and September 2024, inclusive, and covers online and in-person gambling covering Licensed Betting Operators (LBOs) found on Britain’s high streets.

Comparison should not be made with the industry statistics dataset, as this dataset may include free bets and bonuses and does not include data from all operators.

This release compares Quarter 2 (Q2) of financial year 2024 to 2025, with Q2 of 2023 to 2024, looking at how the market has changed in comparative periods over a year.

The latest operator data shows:

  • online total Gross Gambling Yield (GGY) in Q2 (July to September) was £1.32 billion, an increase of 11 percent from Q2 the previous year. The overall number of total bets and/or spins increased 12 percent Year-on-Year (YoY), reaching a new peak for the third consecutive quarter of 25.2 billion, whilst the average monthly active accounts2 in the quarter increased 8 percent
  • real event betting GGY increased by 6 percent YoY to £453 million. The number of bets decreased 10 percent, while the average monthly active accounts in Q2 increased 9 percent
  • slots GGY increased 16 percent to £680 million YoY. The number of spins increased 13 percent to 23.3 billion while the average monthly active accounts in Q2 increased 16 percent to 4.4 million per month. Although this is a new peak for GGY in this dataset for the slots vertical, it should be noted that one operator has re-classified some of its products into the slot vertical this quarter, which has had an impact on the vertical data
  • the number of online slots sessions lasting longer than an hour increased by 9 percent YoY to 10 million. The average session length remained at 17 minutes. Approximately 6.1 percent of all sessions lasted more than one hour compared to 6.6 percent in Q2 the previous year. The number of spins per session has fallen from 147 to 142 YOY, whilst the GGY per session has fallen from £4.20 to £4.13 in the equivalent timeframe
  • LBO GGY decreased by 1 percent to £533 million in Q2 2024 to 2025, compared to the same quarter last year, while the number of total bets and spins decreased by 0.1 percent to 3.1 billion.
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Industry News

Petra Maria Poola Joins Xace as Group Commercial Director

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Xace has announced that Petra Maria Poola has joined the company as Group Commercial Director.

Petra brings a wealth of experience from the iGaming industry having formerly held roles at several iGaming companies such as Yolo, Relax Gaming and SiGMA. She will lead the commercial growth of Xace and its group companies, including crypto and iGaming focused xda.io, helping to drive strategic initiatives across banking, fintech and iGaming solutions.

In her new role, she will mainly oversee the growth of the group’s sales, marketing and account management functions, ensuring a cohesive strategy that supports Xace’s ambitious expansion plans.

“I am incredibly excited to start this new chapter with Xace, and work alongside such a talented team and management. Transitioning into the fintech space, while still connected to iGaming, presents an exciting opportunity for growth and learning. I’m looking forward to applying my expertise to help Xace and its group companies achieve new heights commercially, while gaining deeper insights into the fast-evolving world of fintech,” said Petra Maria Poola.

Reuben Abel, CEO of Xace, said: “Petra’s extensive background in the iGaming sector, combined with her commercial acumen, makes her a valuable addition to the Xace team. She will play a crucial role in expanding Xace’s market presence and enhancing its suite of services tailored to the specific needs of the iGaming and fintech industries.”

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