Exclusive-Silver Lake, PIF have held recent talks to buy gaming software provider Unity, sources say

NEW YORK, Nov 5 : Gaming software provider Unity Software has held recent talks to be acquired by a consortium of investors including private equity firm Silver Lake Partners and Saudi Arabia’s sovereign wealth fund PIF, according to people familiar with the matter, as consolidation in the video game industry continues.

The deal would mark another big gaming bet for Silver Lake and Public Investment Fund, which were part of the consortium that took Electronic Arts, maker of “EA Sports FC,” private in a $55 billion deal that closed in August.

Silver Lake, which owns about 8 per cent of Unity, and PIF approached the company in recent weeks, the people said, asking not to be identified because the discussions are confidential.

The buyer consortium discussed a valuation of about $25 billion before Unity's latest earnings report, which lifted its market capitalization to roughly $21.5 billion. Its shares were up about 4 per cent in extended trading after the Reuters report.

Unity has been working with an investment bank to evaluate its options following the approach, the people said. No deal is certain, and the plan and terms may still change, they added.

Unity declined to comment. Silver Lake and PIF did not immediately respond to requests for comment.

A deal would take private one of the largest providers of software tools used to create video games and other real-time 3D applications. It would rank among the biggest leveraged buyouts in the software sector in recent years.

SILVER LAKE, PIF TIES TO GAMING

Silver Lake and PIF have partnered on major gaming deals before. The EA take-private, which also included Affinity Partners, was among the largest leveraged buyouts ever.

Unity’s game engine and developer tools are already used by Scopely, the developer behind “Monopoly Go!,” and Niantic, the creator of “Pokemon Go.” Both are owned by a group that includes PIF, Silver Lake and Affinity Partners.

Silver Lake, one of the world’s largest technology-focused private equity firms, has a long-standing relationship with Unity. It invested up to $400 million in the company in 2017 and remains among its largest shareholders.

Silver Lake’s Egon Durban also sits on Unity’s board, a dual role that would typically lead him to recuse himself from board deliberations on a sale.

Unity on Thursday reported third-quarter results that beat Wall Street estimates, helped by strong growth in its advertising and game-development businesses. Revenue rose 32 per cent to $622.1 million, and adjusted earnings were 44 cents per share.

Strong growth in Unity’s AI-powered Vector advertising platform helped it post its first quarterly profit on a GAAP basis since going public in September 2020.

San Francisco-based Unity makes the software engine behind thousands of mobile, console and PC games, and its technology is increasingly used in automotive design, filmmaking, architecture and industrial simulation. Its platform lets developers create and run interactive 3D content across multiple devices and operating systems.

Founded in Denmark in 2004, Unity since going public has expanded beyond its core game engine business into advertising technology and broader real-time 3D software.