The downturn in tech valuations is leading to some significant M&A activity, and the latest development on that front looks like it is coming from the world of gaming. Unity, the massive games and other interactive content development platform, is planning to merge with Ironsource, an app monetization platform.
The news is not yet official, but a source tells us that it will be announced formally as early as later today. A spokesperson for Ironsource did not deny the deal when I contacted the company to ask for comment; she only said that she would be sending me a comment when she could later. We're continuing to ask questions and will update this story as we hear more.
The move would bring together two powerhouses in their respective fields — interactive development and app monetization. However, both companies have something else in common: they are publicly traded and have seen their stocks decline in recent months, in line with the larger downturn in the technology sector. That's leading to pressure from shareholders, on top of the companies' wider strategies to continue growing and diversifying themselves as businesses.
The deal has been described to me as a merger, but one company is definitely bigger than the other. Ironsource's market cap at the time of writing is $2.3 billion, but that figure has dropped drastically in the last six months. Unity, meanwhile, is currently valued at $11.8 billion, although it has similarly been weathering a pretty rough financial storm: its stock has lost nearly two-thirds of its value in the last six months.
Pursuing M&A as a route to product and user growth has long been a strategy for larger tech companies, but the last several months have seen a number of M&A deals surface among smaller players, too, as funding sources become a less less free flowing, performance targets are tightened, and valuations drop.
Both of these companies are no stranger to that trend. Ironsource's last acquisition was picking up Tapjoy in January for $400 million. Unity in the same month acquired Ziva Dynamics to expand the tools that it offers to games and other interactive developers, for an undisclosed sum.
… And as we got ready to hit publish on this story, it looks like the Israeli press — Ironsource is traded in the US but was founded out of Tel Aviv — is also starting to report the news.
More to come.