On2 shareholders finally agreed yesterday to allow the encoding company to be purchased by Google (s GOOG), after the search giant raised its bid by $26.5 million earlier this year. But with the acquisition now set to close this week, questions are arising as to just what Google’s plans for the encoding company are.
Under terms of the deal, Google will provide 0.0010 of a share of Google Class A Common Stock for each share of On2 common stock, as well as 15 cents a share in cash, bringing the total value of the deal to about $133 million. It will close after some six months of haggling since Google made an initial offer of $106.5 million in August 2009.
When the deal closes, Google will own all of On2’s video compression technology, which includes the VP6 and VP8 video codecs. At the time it was first announced, many believed that the deal could allow Google to circumvent On2 licensing fees or collect them from third parties like Adobe (s ADBE) or Move Networks. The suggestion was also made that Google could use its control of the new VP8 to push it as the dominant codec for YouTube.
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