Google is to become a major player in the high definition video from handheld devices market after closing its acquisition of On2 Technologies in a deal valued at US$124.6m.
The deal neared conclusion over the weekend after On2 shareholders voted in favour of the transaction.
“We’re excited to welcome the On2 team to Google and to continue to enhance the video experience for users on the web,” said Sundar Pichai, vice president of product management at Google.
“Through rapid innovation in browsers and web standards, the internet is becoming the leading platform for development. We believe On2’s engineering talent and technology will be an incredible asset for us as we work to improve this platform,” Pichai added.
Under the terms of the agreement, each outstanding share of On2 common stock will be converted into the right to receive a combination of US$0.15 in cash per share, 0.0010 of a share of Google Class A Common Stock and cash payable in lieu of any fractional shares of Google Class A Common Stock.
Google said it intends to repurchase in the open market a number of shares equal to the number of shares issued in the transaction.
The repurchase program is expected to commence shortly after the completion of the acquisition. The repurchases will be funded from available working capital.
Since 1992, On2 Technologies, Inc. has been innovating advanced video compression technologies, contributing to some of the most pioneering video products and services from leading global brands and cutting-edge start-ups in web video, social networking, gaming, mobile and wireless, video conferencing and consumer electronic devices.
At the GSM Association’s Mobile World Congress 2010 in Barcelona last week Google CEO Eric Schmidt demonstrated how mobile apps like augmented reality and voice will be core to the company’s vision going forward.
The On2 acquisition will provide plenty of firepower to boost future iterations of the Google Android operating system, which is now shipping at the rate of 60,000 devices a day across a variety of manufacturers’ handsets.
By John Kennedy