14 DAY TRIAL // The acquisition that sparked Google's latest M&A spree is finally closing after several delays and six months in the making. The company announced its intention to buy video codec maker On2 in August for $106.5 million. The offer was deemed too small by the shareholders and Google increased its bid to about $133 million, an offer that has now been accepted by On2's investors.
"On2 Technologies, Inc. (NYSE Amex: ONT) today announced that its stockholders approved the merger of On2 with a wholly owned subsidiary of Google Inc.," On2 announced. "On2 stockholders holding in excess of a majority of the outstanding shares of On2 Common Stock voted in favor of the merger proposal."
Google revealed its interest in the company in August and valuated On2 at $106.5 million in a cash swap deal. The Mountain View-based giant was clearly interested in On2's video compression technologies and the video company's management was eager to get the deal moving. From the start though, there were problems with shareholders believing that the firm could have gotten a better price and that it should have looked at other potential buyers.
Some were dissatisfied enough that they took the matter to court claiming that there were several issues with the way On2 handled the negotiations. The pressure paid off eventually, as Google reluctantly increased its bid for the company, by about 25 percent, putting another $26.5 million on the table. This was said to provide a valuation adjusted for the time that had passed since the initial offer but was really Google just sweetening the deal.
Apparently, it was enough as the shareholders approved the acquisition by a majority vote. The transaction is now nearing completion with just the final formalities to be made. "On2 and Google anticipate closing the transaction on or about February 19, 2010, subject to the satisfaction or waiver of other previously disclosed closing conditions," the press release also read. The move could have major repressions in the ongoing HTML5 video codec debate but it is still too soon to know what Google plans with the acquired technology.