Google sweetens On2 offer

Google has raised its offer for On2 Technologies to $132 million, up from its original offer of $106 million.  The Mountain View, California-based search giant upped its offer following pressure from On2 shareholders, who felt that the original price was too low. GoogleÔÇÖs acquisition of Clifton Park, New York-based On2, an online video compression company, is designed to help it ensure that online video distribution remains low-cost and wide open, as users increasingly view media over devices such as cell phones and set-top boxes. It will particularly help Google ensure that future online video distribution is compatible with platforms such as its smart phone Android operating system and Chrome, which it designed for PCs. On2ÔÇÖs technology shrinks files, which makes them easier to send over the internet. The deal between the two companies was first announced in August last year. However, On2 shareholders challenged the deal as they were unhappy with the price and terms set by Google, which as they saw it, undervalued the company and effectively sold it at a discount of what it was actually worth. Last month, both companies revealed that not enough shareholder support was in place to allow the deal to close. They had hoped the transaction would close by the end of the last quarter of 2009. In addition, On2 was having to deal with lawsuits from some shareholders, which it managed to settle in late 2009. In a statement released yesterday, On2 said: ÔÇ£On2's board of directors approved the amendment to the merger agreement and recommends that On2's stockholders approve the amended merger agreement and the merger proposal.ÔÇØ Shares of On2 rose 25 percent to 75 cents after the two companies announced the revised deal. Google has said that the revised offer to On2 constitutes its final offer. A new shareholder meeting to close the deal is scheduled to take place in February 2010. If the deal is not completed by March 31 2010, either party is entitled to terminate it.  *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *