Saudi Arabia’s Public Investment Fund may be lining up its second big video-game buyout of the year, this time for the software that studios use to make games rather than the games themselves.
The fund and US buyout firm Silver Lake have held talks about acquiring Unity Software at a valuation of about $25 billion, Reuters reported on Thursday, citing people familiar with the matter. Unity was worth roughly $21.5 billion after its latest earnings, and its shares jumped about 15% when the report came out.
No deal has been agreed. Unity is working with an investment bank to review its options, and the talks could still end without a transaction.
The bigger picture
Gaming has become one of the main ways the Kingdom puts its money to work abroad. PIF and Silver Lake closed their $55 billion takeover of Electronic Arts in August, one of the largest leveraged buyouts on record.
PIF’s Savvy Games Group already owns mobile publisher Scopely and has been working with Unity on game development in Saudi Arabia. Silver Lake owns about 8% of Unity, after first investing in 2017.
Why Unity is different
EA makes games. Unity makes the engine and tools that thousands of studios use to build them, including some of the world’s most popular mobile titles. The same software is used in car design, film and other 3D work.
Owning it would give the buyers a stake in the workflow of studios across the industry, including rivals of EA. That widens the commercial opportunity, but it would also raise questions about independence and competition.
A turnaround story
Unity is starting to make money. Its third-quarter revenue rose 32% to $622 million, helped by its AI-powered advertising platform, and it posted its first quarterly profit under standard accounting since going public in 2020.
The company also carries about $2.2 billion of debt, which any leveraged buyout would add to.
What to watch: whether the talks become a formal offer, and how the buyers would finance it at a time when PIF is leaning more on borrowed money.
