Google buys video compression outfit On2 Technologies

Google on Wednesday said it will acquire On2 Technologies, a video compression company, for $106.5 million.

Under the terms of the stock swap, each share of On2 will be exchanged for $0.60 worth of Google common stock.

Google just made a few penny stock investors very happy. On2 shares closed at 38 cents a share on Tuesday.

In a statement, Google said that it will take On2's technology and make it part of the web platform. On2's interim CEO Matt Frost said he was thrilled with the deal, which is expected to close in the fourth quarter.