Google sweetens On2 deal

January 8, 2010 // 1:59 p.m.

Tags: #google #google-acquisition #google-buys-on2 #google-on2-acquisition #hantro #on2 #on2-technologies

Google is continuing its campaign to acquire video compression specialist On2 Technologies, increasing its offer by $0.15 per share - although it says this is a take-it-or-leave-it deal.

As reported over on V3.co.uk, Google - which is hoping to integrate On2's video compression technologies into its Google Talk and YouTube platforms - has upped its offer from $106 million (£66.5 million) to a rather more impressive $134 million (£84 million) in order to sweeten the deal with On2 shareholders.

The increase takes the form of $0.15 more for each of On2's shares - representative of the increase in share price since Google's original offer back in August, which was rejected by shareholders - along with the promise of 0.001 of a share of Google's Class A Common Stock for each share of On2's stock. While a 0.1 percent return might seem stingy, On2's stock is currently trading at $0.73 a share while Google's common stock is sitting at a rather more impressive $594.09 per share.

While an official decision won't be taken by On2's shareholders until February of this year the board of directors is upbeat about the new terms of the deal, stating that it "approved the amendment to the merger agreement, and recommends that On2's shareholders approve the amended merger agreement and the merger proposal."

With On2's video compression technology offering everything from high-definition content to low-bandwidth solutions for mobile devices, the merger would be a big boost for Google's video offerings - and would give the company an entry into the hardware market thanks to On2's Hantro video codec, designed for implementation in embedded devices.

It's certainly not a stretch to imagine that the acquisition is mainly about Google's plans for mobile devices - in particular its Android platform. When taken in the context of the company's other recent acquisitions, which include a voice over IP firm and a mobile advertising specialist, it's a near-certainty that On2's technologies will find themselves a home in Android-based devices should the merger go ahead.

Are you pleased to see Google adding improved video compression to its stable, or do you think that On2's shareholders will hold out for a better offer - despite Google's ultimatum? Share your thoughts over in the forums.
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