Silver Lake and Saudi PIF Reportedly Eye a Unity Takeover

Unity Software may be the next target for two investors that already own Electronic Arts. Reuters reports that Saudi Arabia's Public Investment Fund, or PIF, and Silver Lake are looking at an acquisition of the company behind the Unity game engine.

What Reuters says

The talks so far apparently include a valuation of about $25 billion. This is a report of deliberations, not an announced deal.

Since then Unity has published its latest earnings, which beat estimates on profit. Reuters attributes this to growth in Unity's AI-powered Vector advertising platform, which gave the company its first quarterly GAAP profit since going public in September 2020. GAAP means profit counted under the standard accounting rules, so it is a stricter test than an adjusted figure. Unity has come a long way since the Runtime Fee scandal. The game engine itself has improved too, including its ability to integrate with Unreal.

Silver Lake is already inside

Silver Lake has held roughly 8% of Unity since it invested around $400 million in 2017. That makes it one of the larger shareholders.

Egon Durban of Silver Lake also sits on Unity's board. Reuters notes that this dual role would typically lead him to recuse himself from board deliberations on a sale. In plain terms, he would normally step out of the room when his own firm is a potential buyer.

The EA deal as a reference point

Earlier this year a consortium that included the PIF, Silver Lake and Affinity Partners bought EA in a deal worth $55 billion. The first things to happen to EA after the sale were mass layoffs and $18 billion of debt.

The PC Gamer writer is not hopeful. They write that they cannot imagine anyone working at Unity wants this to go through. They add that the industry seems set on a consolidation crisis in which a few consortiums own everything.

Source: PC Gamer