Vivendi offers to buy majority stake in Dailymotion from Orange

Vivendi has offered to buy a majority stake in Dailymotion from Orange, in a deal that would value the video-sharing site at €250m, according to people familiar with the situation.

If accepted, the resulting deal would involve the Paris-based content and media group acquiring between 75 per cent and 80 per cent of Dailymotion from the telecoms operator, in an all-French deal that is likely to please the country's Socialist government.

Last week, the French government weighed in on Orange's proposed sale of 49 per cent of Dailymotion to Hong Kong-based PCCW, and demanded that France's biggest mobile operator by subscribers explore "all options" before proceeding with a non-European buyer.

The French government is Orange's biggest shareholder with a 25 per cent stake.

Its instruction, which was reminiscent of its 2013 threat to block the sale of Dailymotion to US-based Yahoo, prompted PCCW to walk away from its talks with Orange on Monday morning.

"An environment where policies appear to favour a French or European solution is discouraging for international business participation," PCCW said in a statement "We will therefore withdraw from our discussions with Dailymotion and its current owners."

While PCCW's decision cleared the way for a European deal, it is unlikely to improve international perceptions of doing business in France - at a time when President Francois Hollande's government is trying to project a more business-friendly image.

Le Monde first reported Vivendi's offer on Monday afternoon. Neither Vivendi nor Orange would comment on the deal.

For Vivendi, the bid to take control of the video portal comes less than two weeks before its management goes head to head with minority shareholders over its future direction.

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The demand follows two years of downsizing at Vivendi, which has carried out more than €35bn in asset sales, cancelling its once-onerous debt and leaving the Paris-based group sitting on a huge cash pile.

The proposed acquisition of Dailymotion will do little to reduce the estimated €15bn that Vivendi will have once the last of the asset sales is completed this summer.

But it may offer some small clues as to how it intends to grow its two remaining pillars: Canal Plus, the pay-TV business, and Universal Music Group, the world's largest recorded music company.

Dailymotion is one of the largest competitors to Google's YouTube alongside Vimeo, with more than 2.5bn video views a month and an estimated 128m monthly unique visitors.

Vivendi could bring exclusive content to the video streaming site, potentially allowing Dailymotion to offer premium channels to users alongside existing services paid for through advertising.

Additional reporting by Jennifer Hughes in Hong Kong

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