Silver Lake and PIF in talks to acquire Unity for about $25 billion

What happened

Citing confidential sources, Reuters reports that private equity firm Silver Lake Partners and Saudi Arabia's sovereign wealth fund PIF approached game engine and developer tools company Unity in recent weeks with an acquisition offer. The buyer consortium discussed a valuation of about $25 billion before Unity's latest earnings report.

The numbers

Unity's latest earnings lifted its market capitalization to roughly $21.5 billion. Silver Lake already owns about 8% of Unity and has invested $400 million in the company. After news of the talks broke, Unity shares rose nearly 15% in regular trading to $48.80.

Why it matters

Unity powers a large share of mobile, console and PC games, including Genshin Impact, Hollow Knight, Among Us, Subnautica and Beat Saber. Since going public in 2020, the company has expanded beyond its engine into advertising technology and broader real-time 3D software used in automotive design, filmmaking, architecture and industrial simulation.

The buyers' track record

Silver Lake and PIF, together with Jared Kushner's Affinity Partners, acquired Electronic Arts for $55 billion in a deal finalized in August. Since then EA has undergone major restructurings and studio closures, most recently shutting BioWare and cancelling the next Mass Effect game.

What's next

Unity is reportedly working with an investment bank to evaluate its options. The talks remain preliminary and no deal is assured.