On2 Technologies, Inc. and Google Inc. jointly announced that they have entered into a definitive agreement under which Google will acquire On2, a leading developer of the VP video compression technology.
VP6 has established itself as the de facto Internet video standard through its inclusion in Adobe Flash Player and JavaFX. Hundreds of web video portals, user generated content, and social networking sites use VP6-based Flash for hundreds of millions of users worldwide. VP8 is reportedly able to outperform the industry-leading H.264/AVC video compresison standard.
Under the terms of the agreement, each outstanding share of On2 common stock will be converted into $0.60 worth of Google class A common stock in a stock-for-stock transaction. The transaction is valued at approximately $106.5 million. The transaction, which is subject to On2 stockholder approval, regulatory clearances and other closing conditions, is expected to close in the fourth quarter of 2009.