On2 vows to fight challenges to Google acquisition

Aug 13, 2009

(AP) -- Video software firm On2 Technologies said it will fight legal challenges to its planned acquisition by Google Inc.

The New York-based company agreed last week to a takeover by Mountain View, Calif.-based in a deal valued at about $106 million, with shareholders receiving 60 cents worth of Google shares for each share of On2 stock.

But On2 shareholders filed separate lawsuits in Delaware and New York seeking class-action status this week, alleging that On2 directors breached their fiduciary duties. They claim the directors agreed to a deal that undervalues their shares and doesn't give them a significant premium in return for the change in control.

A Delaware lawsuit alleges, among other things, that On2 officials announced the deal one day before On2 reported its best quarterly performance in 18 months.

The shareholders also say there is little evidence that On2 directors tried to shop around for a better offer and instead agreed to burdensome deal protection measures, including a $2 million termination fee.

On2 makes digital video compression technology that could give Google a way to cut costs for its popular video-sharing site YouTube. The technology can help shrink video files so they can be sent more easily across the Web.

Such compression is important given that YouTube users upload some 20 hours of footage per minute; by shrinking the files, YouTube needs to buy less bandwidth from Internet access providers.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: The New York Times to cut 100 newsroom jobs

add to favorites email to friend print save as pdf

Related Stories

Recommended for you

The New York Times to cut 100 newsroom jobs

8 hours ago

The New York Times Co. says it is cutting about 100 newsroom jobs through buyouts and layoffs in an effort to trim costs and focus more on its digital efforts.

What's PayPal's first solo move?

Sep 30, 2014

PayPal's impending split from long-time partner eBay Inc. will ratchet up its appeal to online retail competitors such as Amazon.com and give it the freedom to aggressively take on new mobile pay challeng ...

AOL to feed more video, news to Microsoft's MSN

Sep 30, 2014

AOL will provide Microsoft's MSN with more video and additional news stories from popular sites such as The Huffington Post and TechCrunch in an expansion of a deal aimed at selling more digital advertising.

User comments : 0