Unity shares drop over 6% after board rejects acquisition by AppLovin

Unity shares tumbled about 7% on Monday, after the video game software company’s board rejected a bid to be acquired by AppLovin.

Unity announced on Monday that AppLovin’s $20 billion bid was “not in the best interests of Unity shareholders.” AppLovin offered to buy Unity for $58.85 per share last week, which was a premium of about 18% to the prior closing price.

Instead of taking that offer, Unity recommends that shareholders vote in favor of its own $4.4 billion proposed acquisition of mobile advertising technology firm IronSource, which was agreed upon last month.

“With the IronSource deal, we think we do better with our customers,” CEO John Riccitiello told CNBC on Monday. “We think we do better with our shareholders.”

Under AppLovin’s proposal, Unity would have had to abandon the IronSource purchase. Riccitiello would become the CEO of the combined company.

“The clear conclusion is that the AppLovin proposal wasn’t likely to lead to a superior proposal,” Riccitiello said. “And we’re highly convicted about the positives for the IronSource merger, where we can do better by way for customers and better by way for shareholders.”

Unity shares climbed more than 10% after the announcement, closing at $55.57 on Aug. 10. The stock jumped another 7.8% on Friday before retreating on Monday.