On2 Technologies Inc has settled legal challenges mounted by some shareholders who opposed Google's proposed $106.5m acquisition of the video software company.

In August, a number of On2 investors expressed dissatisfaction with the price and terms of the takeover, and some filed separate lawsuits in New York and Delaware against the buyout.

The complainants had sought class-action status and a permanent injunction blocking Google's planned takeover of the company.

On2 confirmed in a statement yesterday that it entered into a "proposed settlement" with plaintiffs in five related lawsuits on Friday.

"Under the MOU [Memorandum of Understanding], the plaintiffs, on behalf of themselves and the putative class of plaintiffs, agreed to settle all the aforementioned litigation and release the named defendants in the actions (including Google, which is not participating in the settlement) and their affiliates from, among other things, claims related to the merger," said On2.

The settlement - financial terms of which were kept secret - is still subject to court approval, however.

Google's acquisition of On2 is expected to complete in the final quarter of this year. ®

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• On2 investors bemoan 'unfair' Google buyout (13 August 2009)
• Is Google spending $106.5m to open source a codec? (6 August 2009)
• Google to buy video compression technology outfit On2 (5 August 2009)