Google will acquire On2 (video technologies)
Companies in Relationship
, On2 Technologies
Initial Announcement Date:
Consideration: $123 million, consisting of 174,000 shares of Class A common stock valued at $95 million at deal closing + $28 million in cash (Source: Google 10-Q)
Google signs a definitive agreement to acquire On2 Technologies, Inc., a publicly-held company. On2 Technologies develops video compression software and offers related video services. On2's platform and video compression/decompression software delivers video over proprietary networks and the Internet.
Each share of On2 common stock will be converted into $0.60 worth of Google class A common stock. Google will also acquire On2 options valued at approximately $1.1 million. If the merger is terminated by On2, the company will pay a break-up fee of $2 million.
The transaction received unanimous approval of the Board of Directors of On2 Technologies. Completion of the deal is subject to customary matters such as approval by On2's shareholders, regulatory clearances, expiration or termination of the waiting period under Hart-Scott-Rodino, delivery of opinions from counsel to On2 and to Google that the deal qualifies as a tax-free reorganization. Also no more than one of three specified employees of On2 can rescind or terminate their offers of employment from Google.
A corollary purchase to YouTube, the On2 acquisition has proven crucial to Google's video efforts. Google open-sourced On2's VP8 video codec in May 2010 as a piece of its video format, WebM. YouTube has since started converting its catalog, both new videos as well as existing, to that format. With WebM considered to be well-suited for real-time applications, Google is working on making VP8 the default video codec for both Google Talk and its group video chat platform Google+ Hangouts.
The deal closed on February 19, 2010.
The transaction followed by Google open-sourcing VP8 in May 2010 has had an impact on the overall video streaming industry. For example, Microsoft allowed its own acquisition, Skype, to switch to WebM for all its video calls. However, Apple opted to stay with H.264 (an alternative codec), continuing to pay low royalty fees, rather than adopt VP8.
November 2013 -- Matt Frost, former On2 CEO, is Head of Strategy and Partnerships for Google’s Chrome Media team.
January 2014 -- Google introduces the open-sourced VP9 codec as an alternative to H.265, capable of streaming ultra HD video (also known as 4K) on YouTube with consuming less bandwidth. VP9 is maintained under the Google-backed WebM initiative. VP9 is license-free to CE makers, improves video quality on playback and reduces buffering.
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