On2 Gives Update On Google Merger, Don't Think It's Enough To Make It Happen

Looking to quell investors fears about their acquisition by Google, On2 has posted to their website some more details about the proposed merger. Even with these supporting documentation, I think there is a good chance the deal won't be approved by shareholders when they vote on December 18th. That said, the problem shareholders face if they vote against the deal is that On2 would have to find a way to raise more money. As of September 30th, On2 only had $2.2M in cash and short-term investment and negative working capital of approximately $4.1M. That's not a good position to be in.

On2 also announced that since the proposed merger with Google, no other company has come forth expressing interest in acquiring the company, something investors have really been championing for. That said, if I was a company interested in purchasing On2, I think I'd wait to make that known until after shareholders voted down the deal, if that happens. No company wants to compete with Google in a bidding war. While On2 makes their case in these new documents that the deal is a good one for shareholders since On2 says the transaction valuation is supported by multiple third party financial analysis, I still get the feeling that shareholders are going to vote no on the deal. Exactly where that would leave On2 is to be seen, which puts investors in a tight spot either way.

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FTC regulators had been reviewing the proposed merger for eight months for possible antitrust violations, after Google announced plans in April to acquire the online ad-serving company. The commission, in issuing its decision to let the merger move forward, said the companies are not direct competitors in any relevant market.