Saudi PIF and Silver Lake reportedly eye Unity buyout at $25B

Saudi Arabia’s Public Investment Fund (PIF) and private equity firm Silver Lake have reportedly approached Unity about a takeover, according to Reuters. The report, citing anonymous people familiar with the matter, says the talks centered on a valuation of around $25 billion. No deal has been agreed.

The two investors were part of the consortium behind the $55 billion buyout of Electronic Arts. Unity is reportedly working with an investment bank to weigh its options after the approach. Reuters says Unity, Silver Lake and the PIF did not respond to requests for comment.

The details

Silver Lake is already a significant Unity shareholder. It owns about 8% of the company, following an investment of up to $400 million in 2017. Silver Lake’s Egon Durban also holds a seat on Unity’s board of directors.

GameSpot reports that Unity’s market value stood at $21.5 billion after its latest earnings report, and that its shares rose nearly 15% after Reuters published the story. Eurogamer notes the $25 billion figure was set before that earnings report, which showed a 59% year-over-year rise in strategic revenue and net income of $122 million. Reuters says growth in Unity’s AI-powered Vector advertising platform helped it post its first quarterly GAAP profit since going public in September 2020. Eurogamer treats the $25 billion number as a ballpark rather than a firm price.

The structure of any deal is unknown. The EA purchase was a leveraged buyout that loaded the publisher with debt. Eurogamer points out that the exact nature of a Unity deal is not confirmed, so it could take a different form.

Why it matters

Unity is the second-most popular game engine after Epic’s Unreal, according to GameSpot. It has powered games ranging from Hollow Knight and Among Us to Genshin Impact, and it is also used by car designers, filmmakers and architects.

The PIF already owns studios such as Scopely and holds stakes in publishers including Nintendo and Capcom. Control of a major engine provider would add to that footprint.

The EA deal is the reference point for how this could go. After the buyout, EA reportedly laid off around 400 people and shut down BioWare, and Rock Paper Shotgun reports it also cancelled a Sims-related project codenamed Project Lotus. Whether a Unity takeover would follow the same pattern depends on how it is financed, which the reports do not say.

Unity has also had a rough stretch with developers. Its attempt to charge a fee tied to game installs drew heavy backlash and was walked back, and John Riccitiello later stepped down as CEO.

What we don’t know yet

It is unclear whether Unity will enter formal negotiations, whether the price will move after the latest earnings, or whether other bidders exist. Because Durban sits on Unity’s board while Silver Lake is part of the bidding group, how that conflict would be handled has not been reported.