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Google To Acquire YouTube

by Glen Shapiro,, New York

11 October 2006

Online search portal, Google announced on Monday that it has agreed to acquire video-sharing website YouTube for $1.65 billion in a stock-for-stock transaction.

According to Google:

"The combined companies will focus on providing a better, more comprehensive experience for users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their work to reach a vast new audience."

When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google's own video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company.

The number of Google shares to be issued in the transaction will be determined based on the 30-day average closing price two trading days prior to the completion of the acquisition. Both companies have approved the transaction, which is subject to customary closing conditions and is expected to close in the fourth quarter of 2006.

Both firms have recently drawn fire due to the potentially copyright-infringing nature of their services.

In September, Universal boss, Doug Morris prompted speculation that the company was planning a lawsuit against YouTube and social networking website MySpace, when he dubbed the websites "copyright infringers" who owe the music industry "tens of millions of dollars".

However, on Monday, it emerged that a deal has been reached which would allow YouTube to host copyrighted materal owned by Universal in return for granting the Group a share of advertising revenue.

Warner Music Group Corp. and Sony BMG have also announced separate licensing agreements with Google.

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