SAN FRANCISCO – Internet search leader Google Inc. is in talks to acquire the popular online video site YouTube Inc. for about $1.6 billion in cash and stock, according to published reports.
Mountain View, Calif.-based Google and San Mateo-based YouTube are still at a sensitive stage in the discussion, The Wall Street Journal and The New York Times reported on their Web sites Friday, citing unnamed people familiar with the negotiations.
The blog TechCrunch had reported on rumors of the acquisition talks. Google and YouTube officials declined comment.
Analysts said a Google acquisition of YouTube would make sense for both companies if the reported talks lead to a deal, especially considering Google’s $10 billion in cash on hand.
“It’s damn cheap for a company that already has a global presence,” said Trip Chowdhry, an analyst with Global Equities Research. “YouTube’s brand identity is no less than Google’s and is no less than Coke’s.”
As YouTube’s popularity continues to soar, she said, Google can help make sure the site’s infrastructure can keep pace.
The acquisition would also immediately propel Google to the top of the online video heap. YouTube eclipsed traffic on Google’s video site in February. By July, the number of monthly visitors had grown to about 30.5 million, compared with 9.3 million for Google Video and 5.3 million for Yahoo Inc.’s Yahoo Video, according to Nielsen/NetRatings.
YouTube users watch more that 100 million videos daily.
Google’s video service lets everyday users post clips, too, and unlike YouTube, Google also gives them the choice of selling video. All YouTube clips are free.
YouTube was founded in February 2005 by three former employees of eBay Inc.’s PayPal electronic-payment unit, and its chief financial backer is the Silicon Valley venture capital firm Sequoia Capital, which has invested $11.5 million. Sequoia was also an early Google investor.
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