There were five class action lawsuits brought against the company in relation to Google buying the company for $106.5 million, or $0.60 a share.
Shareholders felt Google wasn’t paying enough for the firm.
There are no financial terms disclosed in the settlement, but there will be “additional supplemental disclosures that are reflected in the proxy statement/prospectus.”
In our story on Google’s acquisitions on Friday, On2 shareholders listed their frustrations in the comments. We doubt this settlement will do much to calm them down.
During the past 18 months we purchased Hantro in Finland. The purchase price for this acquisition was $60,000,000. Hantro embeds technology into semiconductor chips for implementation for telecom and device markets. The future looked great for ON2 as royalties would certainly hit our bottom line. As such, we were excited to see profitability and a higher price per share on the immediate horizon.
That day turned into a nightmare when on August 5, 2009, one day prior to the second quarter results announcement, our management put out an announcement that they had sold (merged) us with Google for a paltry $0.60/share; which is further devalued by capping our price at a ceiling of $0.60 while allowing Google’s “then” share price to dictate the true value on the date that the merger happens. Due to this, and GOOG’s share price escalation, we have seen a current 12% reduction in the true value of the ON2 share price. The next day, Aug. 6, 2009, ON2 announced the breakeven quarterly results that we anticipated. It would have, in fact, been profitable had it not been for $420,000 of M/A expense that our management/BOD allocated for this injustice. A scant two months prior we were trading north of this $0.60/share bid. When it was rumoured that ADBE was going to buy us, our shares rose to $3.99/share. To exacerbate this situation we learned that the management and BOD utilized reference pps periodic dates over the last 12 months to justify this as a “premium price,” even though they were fully aware that ON2’s valuation had been severely depressed by extremely aggressive shorting and FTDs over the last two years. Coincidence?
See also: Grading Google’s Acquisitions →