Since rumors about the deal first surfaced late last wee, the company’s shares have shot up from $410.22 at the start of Friday to $432.10 yesterday in after-hours trading on the Nasdaq.
Mountain View, California-based Google began its own video sharing service last year and selling online episodes of TV shows earlier this year. But it was unable to tap into an active viewing community.
However, YouTube leads the online video viewing market, with about 46%, followed by MySpace with 23%, according to HitWise, which tracks these things.
YouTube will retain its brand, all its employees and its San Bruno, California headquarters.
The companies said they would work together on new features for YouTube users and video directors. Google also will integrate its search technology into YouTube to make it easier for users to find the video footage they seek, said the companies. There also seems to be potential for advertising possibilities, according to Google.
YouTube and Google also separately announced yesterday revenue-sharing deals with large entertainment outfits, including CBS, Sony, BMG Entertainment, Universal Music Group and Warner Music Group. These partnerships will enable Google and YouTube users to watch video and other media for free. Advertising revenue between YouTube and the copyright owners will be shared.
The number of Google shares that will be required to be issued to complete the deal will be based on the 30-day average closing price of Google’s stock two trading days prior to the close of the acquisition, Google said. The deal, which requires regulatory approval, is expected to close in the fourth quarter.