Google Inc. is bowing to pressure from shareholders of On2 Technologies Inc. in its takeover bid for the software company and raising its offer price.

The new offer hikes the deal value to roughly $132 million, up from $106.5 million.

Google reached an agreement to buy the company in August, a deal that would give it video compression technology that could be used to cut costs at the YouTube video sharing site. But On2 shareholders have balked at the price.

The companies disclosed last month that they had failed to collect enough shareholder support to close the acquisition. And On2, based in Clifton Park, N.Y., has had to fend off lawsuits from shareholder who say the offer undervalues the company.

On Thursday, Google said it will give On2 stockholders an extra 15 cents in cash for every On2 share they hold in addition to 0.001 Google share — or about 60 cents worth of its stock, based on the closing price Wednesday.

In morning trading, On2 shares rallied 15.1 cents, or 26 percent, to 74.1 cents.

Google shares fell $3.36 to $604.90.