On2Google and video bandwidth reducer On2 Technologies have amended their merger agreement that was originally announced in August. At that time, the search engine said it would be acquiring the company for $166 million.

Now the deal is being revisited to address On2’s value. Since Google’s stock has gone up since August, the company will provide additional cash per share to its investors. According to Google:

Under the revised terms, each outstanding share of On2 common stock will receive 0.0010 of a share of Google Class A Common Stock for each share of On2 common stock, as previously announced by On2 and Google, plus an additional $0.15 per share in cash consideration.

There’s speculation that Google’s decision to increase its share price and final offer is motivated by the possibility of another company scooping up On2. In particular, comments on various message boards suggest that Oracle’s newly acquired Sun Microsystems and On2 could be a good fit. These speculations could be on target, especially considering that several investor groups have attempted to sue On2 after the Google acquisition was announced. They felt the company didn’t “shop around” enough for a buyer and sold at a discount.

Regardless, On2’s board of directors has approved the amended merger — since Google has made it clear this will be its final offer — and has asked its shareholders to approve the proposal during a special meeting on Feb. 17.

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