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AppLovin Submits a Compelling Non-Binding Proposal to Combine with Unity

Combination of industry’s leading platforms would deliver optimal shareholder value and create an unprecedented full stack solution for developers to create, monetize, measure and grow games

AppLovin announced it has submitted a compelling non-binding proposal to the Board of Directors of Unity Software Inc.  to combine AppLovin, a leader in mobile marketing and monetization, with Unity, an industry leading platform for creating and operating interactive, real-time 3D (RT3D) content, in a transaction where each outstanding share of Unity common stock would be exchanged for 1.152 shares of AppLovin Class A voting common stock and 0.314 shares of AppLovin Class C non-voting common stock.1 Under these terms, current Unity shareholders would receive approximately 55.0% of the outstanding shares of the combined company, with the Class A shares representing approximately 49.0% of the outstanding voting rights of the combined company. Together the combined business would be poised to offer the most comprehensive and fully integrated creation and growth platform for app developers.

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“We believe that together, AppLovin and Unity create a market leading business that has tremendous growth potential that would generate an estimated run-rate Adjusted EBITDA of over $3 billion by the end of 2024 and would be in the best interest of shareholders of both companies,” said Adam Foroughi, AppLovin CEO. “Over the last decade we have built and operated a leading and innovative company in mobile app marketing and monetization solutions. Unity is one of the world’s leading platforms for helping creators turn their inspirations into real-time 3D content. With the scale that comes from unifying our leading solutions and innovation that would be achieved with the combination of our teams, we expect that game developers would be the biggest beneficiaries as they continue to lead the mobile gaming sector to its next chapter of growth.”

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The combination of the two businesses would expect to generate substantial revenue growth, cash flow and operational efficiencies that are well beyond each company’s potential standalone performance. AppLovin estimates this combination will create over $700 million of Adjusted EBITDA from synergies in 2025E, with a minimum of $500 million in 2024E. Given AppLovin’s track record as a leader in the growth and monetization space for app developers the company believes it is better positioned than any other company to develop an end-to-end platform with Unity. AppLovin runs their Software business at a high margin and believes there would be substantial infrastructure savings and other efficiencies of scale for the combined Growth business. The cash flow benefits of running a large, scaled combined Growth business can be reinvested in the Create Solutions business, which AppLovin views as a cornerstone of its joint strategic advantage.

Unity’s audience reach through games built on Create Solutions paired with AppLovin’s powerful AXON machine learning engine will create material efficiency gains for the combined growth platform, leading to revenue gains, but even more importantly facilitating materially more value to app developers. With AppLovin and Unity working in concert, developers would be able to seamlessly take their app from concept to commercialization with continued growth and optimization at far greater scale and effectiveness, which can drive higher growth for the entire mobile app industry and beyond.

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