Web search Google Inc. on Monday said it agreed to acquire top video entertainment site YouTube Inc. for $1.65 billion in stock, putting a lofty new value on consumer-generated media sites.
The deal, the first to value one of the new crop of user-participation Web sites at more than $1 billion, combines two of the most popular Internet brands: Google, synonymous with Web search and rapid innovation, and YouTube, a Silicon Valley upstart that has spearheaded the video-sharing craze.
In anticipation of the acquisition, investors pushed shares of Google up $8.50, or 2 percent, on Nasdaq on Monday to a closing price of $429.00 -- a level not seen since late April. In extended-hours trade following the announcement of the deal, Google stock dipped to $427.63.
The stock had already gained about 2 percent on Friday, when reports emerged that a Google-YouTube deal was in the works. In the last two trading days, Google has added nearly $4 billion in market capitalization -- or more than twice what the company has agreed to pay YouTube.
For Google, the acquisition of YouTube would thrust the Web search leader quickly into the emerging market for video advertising, where it has only a tiny foothold compared with Yahoo Inc. and various Web start-ups, analysts said
