On2 Technologies buys Hantro Products — MobileMonday Global: Industry News

^{Convergence in video compression} On2 Technologies buys Hantro Products

24 May 2007 at 19:12 GMT Timo Poropudas

Upper New York State-based On2 Technologies has purchased Hantro Products of Oulu, Northern Finland. Leading computer video compression specialists is paying between 64 and about one hundred million dollars for mobile video specialist in its own shares with a small portion in cash.

The acquisition accelerates the deployment of On2’s technology on semiconductor chipsets for mobile and embedded devices. Hantro’s technology has been implemented on more than 200 million devices to date and in mobile phones produced by five of the world’s top six handset manufacturers.

Hantro is recognized as the market leader in wireless video intellectual property as measured in revenue, number of shipped devices, and number of customers.

Under the terms of the agreement, On2 will acquire Hantro in a share exchange directly with the holders of all of Hantro’s equity securities (including all outstanding share options) for a combination of cash and shares of On2’s common stock, par value USD .01 per share.

12-19 percent of ownerhip

Immediately after the closing, the Hantro stockholders would own approximately 12 percent of the combined company on a pro forma basis, based on On2’s closing share price of USD 3.38 on May 18, 2007. The number of On2 shares to be issued at closing is subject to adjustment based on Hantro’s stockholders’ equity as of the date of the closing.

Based on On2’s closing share price of USD 3.38 on May 18, 2007, the total value of the acquisition at closing would be USD 58,431,695. After giving effect to contingent consideration of up to an additional 12.5 million On2 shares based on the level of 2007 revenues from Hantro’s business lines, ownership of the combined company by Hantro’s shareholders could be a maximum of approximately 19 percent on a pro forma basis.

Helsinki and California based Nexit Ventures owns approximately a third of Hantro shares. Other investors include Capman, Atine and 2M as well as the company's founders and key personnel.

On2’s video technologies are the de-facto standard for Internet video through inclusion in Adobe Flash Player 8 and 9. On2 codecs are used by leading web publishers as well as VoIP and mobile video companies such as Move Networks, Skype and ChinaMobile.

On2 currently has more than 1 billion deployments of its codecs. As a result of the Hantro acquisition, the combined company will offer a full range of products and capabilities for video applications ranging from very low data rates to high-definition video across web, embedded devices, consumer devices and mobile/Wifi applications.

The acquisition by share exchange is expected to close before mid-August 2007 and is subject to approval by On2’s stockholders and to On2’s raising USD 20,000,000 through sales of On2’s equity securities prior to the closing of the acquisition of Hantro, as well as customary closing conditions. The purpose of the equity offering is to generate working capital for the combined companies.