Purple Knights Boris Logvinskiy Economics Daxiang Xu Business Bernard Low Computer Science Shu Yang Quek Computer Science Merger and Acquisition

Purple Knights Google Acquisition of YouTube YouTube was sold for 1.65 billion dollars, stock for stock. Sequoia Capital received approximately $495 million which translates to the 30% ownership that Sequoia had in YouTube before the acquisition. Google integration plans for YouTube YouTube will be operated as a separate entity from Google with all of the employees staying on. In order to monetize YouTube, Google will introduce it’s ad- based services on YouTube. Moreover, Google will include their search algorithm for video searching and indexing on YouTube.

Purple Knights 3 Google’s reasons for buying YouTube Picture taken from Alexa.com Google acquired YouTube not for it’s technology, which they can easily replicated, but for its social networking aspects and its 72 million user base

Purple Knights 4 YouTube’s Criticisms prior to acquisition Lack of business model YouTube did not have a concrete plan to monetize itself and had not made profits since it’s interception. Copyright issues YouTube had copyrighted content on its site, which opened it up to risk of being sued by media companies, much like Napster was.

Purple Knights 5 Benefits for both parties GoogleYouTube Benefits Traffic Established brand Broader advertising base Strengthen foothold in online video industry Capital Technology Profitable business model Engineers

Purple Knights 6 Risks and mitigation for both parties GoogleYouTube Risk Copyright issues and potential lawsuits Acquisition might cost investors’ confidence in Google Decrease in Google share price can reduce actual realizable value of the amount paid Loss of autonomy Mitigation 12.5% of stock to be paid put in escrow Investors’ confidence not as important because of corporate structure Can employ hedging options to control for downside Provision in contract for YouTube to be a separate entity