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August 6, 2009

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Google embraces compression

GOOGLE Inc is planning to acquire On2 Technologies Inc, a provider of digital video compression technology, in an all-stock deal valued at US$106.5 million.

On2 helps shrink video files so they can be sent more easily across the Web, an increasingly important technology as the volume of online video grows rapidly.

Google, which owns the video sharing site YouTube, said On2 shareholders would receive 60 US cents worth of Google class-A common shares for each outstanding share of On2 they hold.

That represents a 57-percent premium to the New York company's closing stock price on Tuesday.

Sundar Pichai, Google's vice president for product management yesterday said: "Today video is an essential part of the Web experience, and we believe high-quality video compression technology should be a part of the Web platform."

Google expects the deal to close in the fourth quarter.

Google's shares jumped US$2.27 to US$456 in premarket trading, while On2's shares surged 20 US cents, or 52 percent, to 58 US cents.



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