AppLovin abandons acquisition plans, opts for $841m debt financing

AppLovin has dropped plans to pursue an acquisition by a Chinese buyout firm and instead taken on debt financing in order to raise more capital.

Back in January, the firm sold a 9.98% ownership stake to Orient Hontai Capital for $140m. Reuters reports this was part of a $1.4bn agreement to sell itself to the firm, but this deal has now been altered significantly.

Instead of taking a larger stake in AppLovin, Orient Hontai Capital has made a $841m debt investment in the mobile marketing platform. In a blog post announcing the agreement, CEO Adam Foroughi said this allows AppLovin to "maintain full control of our business."

He continued: "This deal will accelerate our momentum toward exciting new ventures and exponential growth. We are excited to start a new chapter in AppLovin's history and look forward to continuing our goal of helping developers scale their businesses."

However, Reuters reports the altered deal is due in part to pushback from the US government, which opposed the original plans to sell AppLovin to a Chinese company.

The Committee on Foreign Investment in the United States (CFIUS) is a government panel that monitors business transactions to identify potential national security threats. The body has reportedly become more reluctant to approve Chinese deals since President Trump was inaugurated in January.

A source told Reuters that CFIUS previously expressed concerns about the AppLovin acquisition, citing the fact that the company's data would be owned by a foreign company and could pose a security risk.

However, a separate source believes the debt financing agreement will not be opposed because it does not give Orient Hontai Capital any control over the company beyond the 10% stake it already owns.