IS - Why Unity Software Stock Was Up 14% in August
Shares of Unity Software (NYSE: U) were up 14.3% in August, according to data provided by S&P Global Market Intelligence . If you're a shareholder hoping for some action, you got what you wanted -- the month was jam-packed with information relevant to an investment thesis. And some of it was positive news, which is why the stock was up.
Unity stock started going up early in August on an exclusive Reuters report (citing anonymous sources) that said the company is looking to spin off its business in China, potentially for $1 billion. As of the second quarter of 2022, Unity had around $1.8 billion in cash, cash equivalents, and marketable securities. So you might think it doesn't need money. But it's embarking on an expensive plan and an extra $1 billion will come in handy if the report is true.
On July 13, Unity announced its plans to merge with ironSource (NYSE: IS) in a $4.4 billion deal. Granted, it's an all-stock deal technically. But the details are far more complicated. The company is buying back $2.5 billion in stock over the next two years to offset the dilution of the all-stock transaction. And certain investors are loaning $1 billion to help. In short, having $1 billion from its China operations could prove helpful in making this deal work for shareholders.
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Why Unity Software Stock Was Up 14% in August