Google Increases Bid for On2 to $133 Million

To appease disgruntled shareholders

Google has been on somewhat of an acquisition spree lately, but it hasn't always worked out for the best. In fact, some of the biggest deals are still in the works and being held up, either by regulators, in AdMob's case, or by disgruntled shareholders as is the case of On2. The latter may soon change though, as Google and On2 have jointly announced a revised offer which would put more money in the hands of the On2 shareholders.

Under the revised merger agreement, Google will equate every On2 common stock share with 0.001 of a Google class A common stock share, as in the previous proposal, but will also pay $0.15 per On2 share in cash. The deal was originally valued at $106.5 million amounting to $0.60 in Google common stock per On2 share. With the additional cash incentives, the deal is now worth $133 million.

"The revisions to the terms of the merger agreement serve, in part, to address the fact that, since the acquisition was first announced in August 2009, the market value of Google's Class A Common Stock has increased significantly while the value of the acquisition has remained fixed for On2's stockholders," the two companies explain.

"By increasing the consideration offered to On2's stockholders by an additional $0.15 per share in cash, On2's stockholders will receive additional value for their On2 common stock that Google and On2 believe better reflects the value that On2's stockholders would have received had the acquisition closed closer to the time of its announcement in August 2009," they add.

While the press release tries to put some positive spin on the move, the fact of the matter is that shareholders were unhappy with the initial deal even leading to a lawsuit filed by several of them to block the deal. The lawsuit was later settled and Google seems to want to get the whole thing over with by increasing its offer. On2 shareholders are having a meeting next month to vote on the amended offer. If the deal fails to go through by March 31, both companies have the right to terminate it unilaterally.

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