Silver Lake and Saudi Arabia's PIF Held Talks to Buy Unity at About $25 Billion

According to those people, the group discussed a valuation of about $25 billion in recent weeks. That was before Unity's third-quarter results, released the same day, lifted its market value to roughly $21.5 billion. Reuters said Unity has hired an investment bank to review its options, that the talks are preliminary and that no deal is certain. Unity declined to comment. Silver Lake and PIF did not immediately respond to Reuters' requests for comment.

A deal would rank among the largest leveraged buyouts of a software company in recent years, according to Reuters. It would also extend the gaming bets of a group that already owns one of the industry's biggest publishers. Silver Lake and PIF were part of the consortium, with Affinity Partners, that took Electronic Arts private in a $55 billion deal that closed in August. Buying Unity would add a supplier of development tools and advertising technology that thousands of studios rely on.

Silver Lake is already one of Unity's largest shareholders, with about 8% of the company, and invested up to $400 million in Unity in 2017. Egon Durban, a Silver Lake executive, sits on Unity's board. Reuters said someone in his position would normally recuse himself from board discussions of a sale. Reuters also reported that Unity's engine is used by studios connected to the same investors, including Scopely, the developer of Monopoly Go!.

Unity's shares had climbed nearly 15% in regular trading on Thursday after the earnings report. According to Investing.com, they rose a further 6.6% to $52.04 in extended trading by 19:16 ET after the takeover report.

The company reported a 32% rise in third-quarter revenue to $622.1 million and adjusted earnings of 44 cents a share, beating Wall Street estimates. Growth in Vector, its AI-powered advertising platform, helped it post its first quarterly profit under generally accepted accounting principles since it listed in September 2020.

Founded in Denmark in 2004 and based in San Francisco, Unity sells software used to build mobile, console and PC games. Its tools are also used in car design, filmmaking, architecture and industrial simulation. Since going public it has expanded into advertising technology and broader real-time 3D software.

The $25 billion figure was discussed before this week's rally, so the premium it offers over Unity's market value is now much smaller. Any formal offer would need to account for that gap.