Unity Software (NYSE:U) shares plunged more than 15% Wednesday as sellers were in the majority after Unity (U) said it would acquire ironSource (NYSE:IS) for $4.4B in stock, and also cut its full-year revenue outlook.
The deal was announced prior to the start of Wednesday's trading session. Under terms of the acquisition, Unity (U) shareholders will own 73.5% of the combined company, while ironSource (IS) shareholders will own the remaining 26.5% of the business.
While Unity (U) found no love on the stock market following the deal's announcement, ironSource (IS) shareholders couldn't have been happier as they sent Tel Aviv-based company's stock price up by 50% to $3.34 a share.
San Francisco-based Unity (U) specializes in developing 3D platforms used to build games for PCs, mobile devices and gaming consoles. ironSource (IS) develops advertising technology companies use to monetize games.
In addition to announcing its acquisition, Unity (U) also cut its full-year revenue outlook. The company now expects sales for the year to be between $1.3B and $1.35B, compared to its earlier estimate of sales in a range of $1.35B and $1.42B. Unity (U) also said its board of directors authorized a stock buyback of as much as $2.5B, which would take effect when the ironSource (IS) deal closes.