Google to On2 Shareholders: OK, Fine, Here’s Another $26.5M

Google (s GOOG) has amended its offer to acquire the video encoding company On2 Technologies (s ONT), throwing in another $26.5 million in cash to sweeten the deal. The move comes after months of protest by On2 shareholders, who filed lawsuits and threatened not to vote in favor of it.

Under the new terms of the proposed deal, Google would still provide 0.0010 of a share of Google Class A Common Stock for each share of On2 common stock, as previously announced. But On2 shareholders would also get 15 cents a share in cash, which adds an additional $26.5 million to the value of the deal to bring it to $133 million.

Although Google and On2 expected the deal to be closed by the fourth quarter last year, On2 shareholders have fought against the terms of the search giant’s bid, filing lawsuits in New York and New Jersey and setting up a web site, “Vote No To Google’s Current Offer for On2,” with shareholders representing as much as 20 percent of On2’s outstanding shares pledging to kill the deal. The lawsuits were settled in October, but shareholders were still unhappy, especially since Google’s stock continued to rise while the price on the deal remained fixed.

On2 shareholders will meet on Feb. 17 to vote on the amended offer. But as Google noted in its press release (in boldface, no less) announcing it, “This increase in the consideration that Google is offering to On2’s stockholders constitutes Google’s final offer.