Saturday, August 15, 2009

Not So fast Google, On2 Shareholders Protest "Attempted Theft" of Company

In a follow up to the story that On2 Technologies Inc., the video compression software company that is being acquired by Google for a $106.5 million stock deal, the On2 board and CEO is under fire from shareholders who "are livid about the attempted theft of the company at $0.60 per share" and believe that On2 is worth more than 60 cents a share.

"While many of us in the industry have been trying to figure out what exactly Google will do with On2 after the acquisition, we may be getting ahead of ourselves. Some On2 investors have filed separate lawsuits in New York and Delaware looking to block the acquisition, claiming that On2's board essentially agreed not to shop the company around and look for a higher price. Many of On2's investors are already banding together to stop the deal and have launched a website at to make their opinions heard."
This play by the shareholders is their call to action to get fair value for their company shares. Many feel it's worth 10 times the offer by Google. Their web site points out On2 actually made money this quarter also traded at $.65 several weeks ago. In fact, On2 traded for as much as $3.99 in 2007 when it was rumored that Adobe might acquire it and long before the VP8 product was developed.

According to VOTE4On2,
"On2 management has consistently stated over recent quarters that income was ramping up and expenses were falling into line. Indeed, 2nd quarter results confirmed that and there is every indication and belief that 3rd and 4th quarter results will be even better as income from recently signed license agreements in China and elsewhere kick in. This company is about to rocket.

On2 is on the cusp of exponential growth in the most explosive sector of the video universe. Their VP8 product is the game changer in video transmission and is just now being introduced. On2’s codecs have recently become the de facto standard in China, the largest market on the planet. Additionally, On2 codecs are ubiquitous in Flash, Java and elsewhere. On2 has 10 US patents with 14 pending, Hantro has 8 patents with 12 pending - and On2 owns VP8, a superior technology to H.264! On2 codecs are also now showing up in mobile video on the web and smart phones - the real future of video. There is a lot more to this company that isn't immediately apparent"
The web site also collects both company news including On2's most recent earning calls and other news, commentary, and blog coverage. Shareholders spoke out on the earnings call with many questioning why the company was being sold when it's making a profit. Interim CEO of On2, Matt Frost stated that they were unable to comment on the specifics of the merger since the deal has been filed with the SEC and they are constrained under securities reqgualtions. He mainly apologized to the many shareholders for not being able to answer their questions and asked for their patience. Several shareholders said that they'd see him court.

Dan Rayburn suggested that the shareholders are not going to take this lightly,
"If there is one thing I have learned about many On2 shareholders in the past it's that they are very opinionated, do a good job of talking to one another and sharing info, are very aggressive in trying to get their message across and always seem to be up for a fight."