The Most Troubling Thing About Unity's ironSource Deal
Unity Software (NYSE: U) recently agreed to merge with ironSource (NYSE: IS), an Israeli ad tech company, in a $4.4 billion deal. The deal stunned Unity's investors for three reasons.
First, Unity's offer represented a 74% premium to ironSource's 30-day average trading price, and the all-stock deal will dilute Unity's existing shares by more than 30%. Second, Unity plans to take on $1 billion in fresh debt after the deal closes and buy back $2.5 billion in shares to offset some of that dilution.
Lastly, the decision came right after Unity laid off about 4% of its workforce, with most of the job cuts hitting its struggling Unity Ads division. Buying ironSource strongly implies that Unity has given up on fixing its own broken advertising algorithm -- which caused its revenue growth to decelerate significantly this year -- as it buys an alternative solution instead.
Source Fool.com
