SEC Filing Suggests Nothing Untoward in Google-On2 Backstory

Earlier this summer, Google announced its intention to acquire video-compression vendor On2 Technologies in a stock-based transaction valued at approximately $106.5 million.

Some On2 shareholders took exception to the announced transaction. They filed suit to block the deal, arguing that On2’s board of directors violated its fiduciary duty in not attempting to find another prospective buyer for the company and in not demanding a higher price from Google.

At the time the lawsuit and attendant injunction request surfaced, I was skeptical of the disgruntled shareholders’ claims. The price Google was willing to pay for On2 seemed a fair valuation. In my view, the disaffected shareholders crafted the lawsuit to squeeze Google for an out-of-court settlement that would amount to a few more pennies per share.

Now, as reported by paidContent.org, an On2 SEC filing provides a chronological account of the background behind the merger. If the content in that filing is accurate, the shareholder lawsuit definitely appears to lack merit.

Basically, the SEC filing indicates that On2’s board performed its due diligence, upheld its fiduciary obligations, considered other potential buyers for the company (though it did not actively pursue them, for reasons explained in the filing), and negotiated upward from an original Google offer of 45 to 50 cents per share to the agreed price of 60 cents per share. At one point, the On2 board wanted as much as 90 cents per share and was pushing for a minimum of 65 cents, but Google stood firm with its final offer of 60 cents.

Having read the filing, I cannot see an instance of malfeasance, dereliction of duty, or impropriety in the actions of the On2 board of directors. The chronology suggests that the initial talks, subsequent negotiations, and eventual acquisition agreement followed a progressive, responsible course.

2 responses to “SEC Filing Suggests Nothing Untoward in Google-On2 Backstory

  1. First you have to believe that chronological account isn’t something made up after the accusations which is easy to do to cover there butts. Second, On2 shareholders were continually told that that company wasn’t for sale. Third, the company had just reached profitably. Every earnings call the interim CEO has told share holders about the significant headway that On2 has made into the industry. Fourth, On2 valuation was determined to be on the past share price AFTER the stock was shorted down and not what the technology is worth to Google. If I have something that somebody wants regardless if I’ve ever made a penny on it I’m going to get as much value as I can for it based on how badly the buyer wants it. This is a publicly traded company and On2 HAS to look out for the shareholders interest first. They HAVE to. The fact is that On2’s employees and Board of Directors stand to gain more financially than the shareholders. Not to mention as Google’s share price continues to rise as it has been On2’s share price is capped 60 cents so “if” the day comes and the acquisition by Google does go through On2 shareholders are going to receive much less Google shares in exchange for their On2 shares.

  2. As of this comment (12/25/09), neither On2 nor Google have yet made any statement regarding the proof of the deliberate, destructive, illegal manipulation of the stock of On2 (ONT) that has been occurring over the last several years, costing On2 and its shareholders millions is extra shares being issued and many millions of extra dollars as well.

    The proof is contained in the three-part ONT Shareholder White Paper and is readily available at:

    vote4on2.com

    All data was obtained from publicly published sources and is easily verifiable.

    It is because of this knowledge that the shareholders will not sell the company to Google or anyone else until the perpetrators of this illegal activity are revealed and prosecuted to the maximum. Then the shareholders will take their turn at the perps in civil court.

    Should Google acquire On2 before then, they will forever be tainted by this scandal.

    SPLF

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