Google made the announcement today after a full weekend of speculation and rumor that the company has agreed to buy video-sharing site YouTube for $1.65 billion in a stock-for-stock transaction. Google says YouTube will continue operate independently.

The companies will combine their efforts to improve the video-sharing experience and say they will offer new opportunities for professional content owners to distribute their work.

“The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,” said Eric Schmidt, Chief Executive Officer of Google.

“Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”

Rumors of the acquisition began floating around the blogosphere last Friday, a buzz that has yet to down at press time Monday. On Jim Cramer’s Real Money radio program, Cramer predicted that Google stock would reach $500 per share upon the acquisition. Also, according to Cramer, a $1.65 billion price is a relative bargain. He values YouTube at upwards of $3 billion.

“Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners,” said Chad Hurley, CEO and Co-Founder of YouTube.

“I’m confident that with this partnership we’ll have the flexibility and resources needed to pursue our goal of building the next-generation platform for serving media worldwide.”

People had doubted that an acquisition was in play, as many felt that along with YouTube came copyright infringement woes, as users often upload content without permission.

Google appears to have taken care of a large chunk of that by following YouTube’s stated goal of having every music video ever made on the site. Earlier this morning, Google announced separate deals with Warner Music Group and Sony BMG to license music videos.

YouTube will retain its distinct brand identity, strengthening and complementing Google’s own fast-growing video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company.

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