Robert H. Heath

Google Is Overpriced: Why Acquire On2 in an All Stock Deal?

You may be reading too much into this.

reinharden's point is a good one. The sellers may prefer Google stock to cash for tax purposes. And if any ONT shareholders want cash, they can easily short the appropriate number of GOOG shares and lock in their value (assuming the deal closes).

Additionally, ONT stock has traded near the $0.60 value of the GOOG deal as recently as mid-May. The management and board may feel that GOOG is a good (or great) strategic partner. It's easier to argue the strategic value of a deal when the consideration is stock vs. cash. If management accepted a cash bid of $0.60 per share, it would be very difficult for them to resist a higher cash bid from an unwelcome suitor.