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Under the terms of the agreement, released in an August 5 release, each outstanding share of On2 common stock will be converted into $0.60 worth of Google class A common stock in a stock-for-stock transaction. The transaction is valued at approximately $106.5 million.
"Today video is an essential part of the web experience, and we believe video compression technology should be a part of the web platform," said Sundar Pichai, VP, Product Management, Google. "We are committed to video quality on the web, and we believe that On2's team and technology will help us further that goal."
Matt Frost, interim CEO of On2 said, "After intensive review of On2 products, Google confirmed our long-held beliefs as to the quality of our video technologies. This transaction is a testament to the hard work of every On2 employee and the strongest possible endorsement of our products and people. On2 will continue to support and sell our products throughout the transition. We believe that Google shares our ambitions and know that our products and expertise, combined with Google's globally recognized brand, ingenuity and resources, will create an incredible team."
The number of shares of Google class A common stock to be received by On2 stockholders will be determined by dividing $0.60 per share by the volume weighted average trading price of a share of Google class A common stock based on the sales price of every share of Google class A common stock traded during the twenty trading-day period ending on and including the second trading day prior to the date of the meeting of On2's stockholders to consider and vote on the merger agreement.
$0.60 per share represents a premium of approximately 57 percent over the closing price of On2's common stock on the last trading day immediately prior to the announcement of the transaction, and a premium of approximately 62 percent over the average closing price of On2's common stock for the six month period immediately prior to the announcement of the transaction.
The transaction, which is subject to On2 stockholder approval, regulatory clearances and other closing conditions, is expected to close in the fourth quarter of 2009.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
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