August 13th, 2009
On2 shareholders sue to stop Google acquisition
On2 Technologies, the video compression company acquired by Google last week, has been sued by shareholders looking for a better deal.
According to an SEC filing (Techmeme), two class action suits were filed in Delaware and New York State. According to On2:
Both complaints generally allege, among other things, that the members of the Company’s board of directors breached their fiduciary duties to the stockholders of the Company in connection with negotiating and entering into the previously disclosed merger agreement with Google Inc., and that Google and the Company aided and abetted in such alleged breaches of the directors’ duties. Both complaints seek, among other things, declaratory and injunctive relief and the Delaware complaint also seeks damages in an unspecified amount. The Company believes that these claims are without merit and intends to vigorously contest such allegations.
The complaints focus on how On2 reported bottom line improvement soon after the Google deal was announced.
Also see: A look at On2 Technologies and why Google wants it
On2 reported a second quarter net loss of $224,000 compared to a loss of $7.2 million a year ago. Revenue in the second quarter was $5 million, up 53 percent from a year ago.
Matt Frost, interim CEO of On2, said the company “delivered our strongest revenue performance in six quarters.” Shareholders are arguing that those results could have garnered a better deal for On2.
In early 2008, On2 traded above $1 a share. On2 sold for 60 cents a share.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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