Google to buy video compression firm for $106.5 mil

MOUNTAIN VIEW, Calif. -- Google says it plans to acquire On2 Technologies, a provider of digital video compression technology, in an all-stock deal valued at $106.5 million.

Google Inc., based in Mountain View, Calif., says On2 Technologies Inc. shareholders will receive 60 cents worth of Google class A common shares for each outstanding share of On2 they hold. That represents a 57 percent premium to the Clifton Park, N.Y., company's closing price Tuesday.

Sundar Pichai, Google's vice president for product management said Wednesday in a statement, "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 owns the popular video sharing site YouTube.