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Google Inc. said Monday it agreed to acquire privately held YouTube Inc., the No. 1 Internet video-sharing site on the Web, for $1.65 billion in stock. On Monday, the boards of both Google and YouTube approved the terms of the deal, which was announced after the market closed.

Google said YouTube will continue to operate as a separate entity. The deal is expected to close in the fourth quarter.

"Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers," Google Chief Executive Eric Schmidt said in a written statement. - MarketWatch