AppLovin overhang removed after walking away from Unity bid - analyst

Sep. 13, 2022 9:11 AM ETUnity Software Inc. (U), APPBy: Joshua Fineman, SA News Editor7 Comments

Unity Software headquarters in San Francisco

Sundry Photography/iStock Editorial via Getty Images

AppLovin's (NASDAQ:APP) decision to not submit a revised takeover bid for Unity Software (NYSE:U) removes an overhang on its shares as the market had expected another offer, according to a Stifel analyst. AppLovin shares ticked up 0.7% in premarket trading, while Unity dropped 8.2%.

"Our sense is that AppLovin ended its pursuit of Unity as it was unwilling to further dilute its shareholders for an asset that they viewed as a “nice to have” rather than a “must have,"' Stifel analyst David Pang wrote in a note. "Going forward, AppLovin plans to focus on improvements to its products and technology and expanding into newer high-growth markets (i.e., CTV)."

AppLovin remains buy rated at Stifel with a $50 price target.

Unity (U) had rejected APP's unsolicited bid last month and recommended that its shareholders vote in favor of its acquisition of ironSource (NYSE:IS). Under APP's bid, U would have had to scrap its deal to buy IS.

AppLovin (APP) shares have plunged almost 30% since it made it's offer for Unity on Aug. 9. AppLovin short interest is 11%.

On Thursday IronSource pushed back its shareholder vote on Unity sale to Oct. 7, Unity sets vote for same date.

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