Google has offered up $106.5 million in stock to acquire On2 Technologies, a firm specializing in video compression technology, in an effort to boost the quality of its video offerings on the Web.
“Today video is an essential part of the web experience, and we believe high-quality video compression technology should be a part of the web platform,” Sundar Pichai, Google’s (NASDAQ: GOOG) vice president of product management, said in a statement. “We are committed to innovation in video quality on the Web, and we believe that On2’s team and technology will help us further that goal.”
On2, founded in 1992 and based in Clifton Park, N.Y., dabbles in video compression technologies for applications on both the PC and mobile devices.
The firm has counted as clients some big names in IT, including Adobe, Skype, Nokia and Sun Microsystems.
For Google, the acquisition suggests its commitment to improve the quality of its online video offerings.
The company isn’t saying much about how it plans to integrate On2’s compression formats, though YouTube seems a likely bet. Google has been bringing more longer-format video to YouTube while pegging its hopes for monetizing the property on selling ads against professional content.
“Today, video is an important part of many people’s everyday activities on the Internet and a big part of many Google products,” the company said in a blog post. “Because we spend a lot of time working to make the overall Web experience better for users, we think that video compression technology should be a part of the Web platform.”
On2 trades on the American Stock Exchange under the symbol ONT.
Under the terms of the deal, On2 stockholders will receive $0.60 worth of Google stock for each outstanding share of On2 they hold, amounting to a 57 percent premium over yesterday’s closing price.
The deal is subject to approval from On2’s shareholders and regulators, but Google expects the all-stock transaction to close in the fourth quarter of this year.
