Unity operates a platform for developing mobile, console and computer videogames.


Igor Golovniov/SOPA Images/Zuma Press

Unity Software Inc.’s

U -7.34%

board has unanimously agreed that the $17.5 billion buyout offer from

AppLovin Corp.

APP -5.36%

isn’t in the best interests of shareholders.

Unity on Monday recommended shareholders vote against the AppLovin deal and instead vote in favor of Unity’s planned deal to buy ironSource Ltd. for $4.4 billion, a merger that was agreed upon last month. IronSource runs a platform for publishing and scaling mobile games and other apps.

“We remain committed to and enthusiastic about Unity’s agreement with ironSource and the substantial benefits it will create for our shareholders and Unity creators,” Unity Chief Executive Officer

John Riccitiello


Last week, AppLovin offered to buy Unity in an all-stock deal valued at $58.85 a share. Under AppLovin’s proposal, Unity shareholders would control 55% of the combined company and appoint a majority of the board but have only 49% of voting rights. The company would be led by Mr. Riccitiello, while AppLovin CEO

Adam Foroughi

would be chief operating officer.

Representatives for AppLovin didn’t immediately return a request for comment.

Shares of Unity fell 5% to $55.50 in premarket trading, while ironSource stock jumped almost 15% to $4.60 a share. AppLovin shares were little changed in the premarket session.

IronSource said Monday that it remains committed to its merger with Unity and said it “is confident it will create superior value for shareholders, customers, and employees.”

AppLovin makes tools for app developers to improve marketing and revenue generation. Unity operates a platform for developing mobile, console and computer videogames as well as other interactive software applications. Together, they essentially would provide a one-stop shop of tools and resources for mobile-game and other app developers.

Write to Will Feuer at will.feuer@wsj.com

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