April 7, 2015 / 11:34 AM / in 3 years

Vivendi in exclusive talks to buy Orange's Dailymotion

Dailymotion website pages opened in an internet browser are seen in this photo illustration taken in Paris, May 3, 2013. REUTERS/Christian Hartmann

PARIS (Reuters) - French media group Vivendi has entered exclusive talks to buy 80 percent of video-sharing website Dailymotion from telecom operator Orange for 217 million euros ($236 million), the companies said on Tuesday.

The offer won the backing of a “large majority” of Orange’s board, ahead of a rival bid from German broadcaster ProSiebenSat.1, Orange chief Stephane Richard told a parliamentary economic affairs committee.

Richard said Orange would keep the remaining 20 percent of Dailymotion and a right of veto on key issues such as jobs as part of the deal, which corresponds to an enterprise value for Dailymotion of 265 million euros.

“Orange and Vivendi will now enter into a period of exclusive negotiations in order to finalize the terms of this operation,” the companies said in a statement.

Orange said the deal would give Dailymotion “the means to accelerate its growth and to turn it into one of the world’s largest content distribution platforms”, adding that it would use the proceeds to reinforce its digital business.

For Vivendi Chairman Vincent Bollore, the deal marked “a first step in our ambition to create a large, global group that is focused on media and content”.

Vivendi is in a fight with activist shareholders over its strategy and how it spends the proceeds from a radical slim-down over the past two years. Having exited telecoms and video games, Bollore and management want to build Vivendi into a stronger media group by adding to its Universal Music Group and French pay-TV operator Canal Plus, and making acquisitions.

Orange has been looking for a partner for over a year to help Dailymotion expand internationally to try to compete with much larger rival Google’s YouTube.

The Vivendi negotiations come after Hong Kong conglomerate PCCW said it had ended talks to form an alliance with Dailymotion, citing the French government’s desire to see the video-sharing site remain in European hands.

French Economy Minister Emmanuel Macron said last week that Orange, in which the state is the biggest shareholder with about 25 percent, must consider all offers for Dailymotion, adding that France was seeking to promote a strong European digital sector.

In 2013, Orange was in talks to sell all or part of the site to Yahoo, but the French government scuppered the deal over concerns about a promising start-up being snapped up by a U.S. giant.

Dailymotion counts 128 million unique visitors per month, compared with 1 billion for YouTube, and achieves less than 100 million euros in annual sales.

($1 = 0.9210 euros)

Writing by James Regan; Editing by Ingrid Melander, Leigh Thomas and David Evans

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