​Vivendi in talks to buy 80 percent of Dailymotion from Orange

Orange has found a France-only solution to its long-running struggle to sell a stake in French YouTube rival Dailymotion.

Orange has entered exclusive talks with French media firm Vivendi to sell a majority stake in video-sharing site Dailymotion.

The deal could bring an end to Orange's two-year search for a partner to help develop the YouTube rival, which has seen the French government intervene a number of times with demands to prevent the prized French startup from falling into foreign hands.

The pair will exclusively negotiate Vivendi's acquisition of an 80 percent stake in Dailymotion for €217m, which values the site at €265m. Under the proposal, Orange will retain a 20 percent stake in the company.

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The video-sharing startup was founded in 2005 and has emerged as a key rival to YouTube in France, albeit but on a much smaller scale than the Google-owned site. Dailymotion became 100 percent owned by Orange in 2013 and almost ever since then, Orange has been seeking to partner with a more content-focused player.

Its suitors have included Yahoo, which in 2013 was due to acquire a 75 percent stake in the site, giving it a platform to compete with YouTube. However the deal was scuttled after the French government objected to the sale of a controlling interest in the site to a foreign company.

Vivendi sees an opportunity to blend its own assets in music and pay-TV, such as Universal Music Group and Group Canal+, with Dailymotion and hopes to boost its international presence.

As noted by the Wall Street Journal, Vivendi has sold off numerous telecommunications and video game assets that left it €5bn in net cash at the end of 2014, and has recently been under pressure from investors to outline a new strategy.

"This is a first step in our ambition to create a large, global group that is focused on media and content. In addition, this operation illustrates our capacity to develop international strategic partnerships, in particular with Orange," Vincent Bolloré, chairman of Vivendi's supervisory board, said in a statement.

Orange's negotiations with Hong Kong's PCCW Group over Dailymotion this March hit a similar snag to its efforts with Yahoo in 2013. According to the Financial Times, PCCW was in line for a 49 percent stake at a valuation of €250m but withdrew its offer after the French government, which owns 25 percent of Orange, urged the telco to seek a European partner instead.

Earlier talks between Vivendi and Orange had also failed to yield a deal. A member of Vivendi's management said its offer to use not just video content but also music content from Universal helped push it across the line this time, according to the WSJ.

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