Google has announced it is to acquire On2, a company described as a leading developer of video compression technology. The transaction - which will be stock-for-stock - is valued at around $106.5 million.

"Today video is an essential part of the web experience, and we believe high-quality video compression technology should be a part of the web platform", said Sundar Pichai, vice president, product management, Google in a statement.

"We are committed to innovation in video quality on the web, and we believe that On2's team and technology will help us further that goal".

In a blog post, Google explains the purchase: "Because we spend a lot of time working to make the overall web experience better for users, we think that video compression technology should be a part of the web platform".

The transaction is subject to On2 stockholder approval and regulatory clearances and is expected to close in the fourth quarter of 2009.