Yahoo Attempt for Dailymotion Stake Stalls on French Tussle

Yahoo! Inc.’s plan to buy a stake in France Telecom SA’s video site Dailymotion has stalled after a disagreement about the deal, according to the French government.

Yahoo and France Telecom, owner of the Orange brand, haven’t been able to reach an accord, French Industry Minister Arnaud Montebourg said in an e-mailed statement late yesterday. The government is France Telecom’s largest shareholder.

Any deal needs to be “balanced” and beneficial to both companies, Montebourg said. Yahoo had been in talks to buy as much as 75 percent of Dailymotion, which is valued at $300 million, the Wall Street Journal reported in March, without citing the source of its information.

“At this stage, Yahoo and Orange aren’t able to reach an agreement that satisfies all parties,” the government said. Montebourg “wants to underscore that the Industry Ministry is keen on creating the optimal conditions for Dailymotion’s international development.”

France Telecom increased its stake in Dailymotion to 100 percent in January, though the company has been looking for a partner to buy some of the shares and has been in discussions with a number of other groups, Tom Wright, a spokesman, said in an interview today.

“For Dailymotion to develop in the future and grow, it needs to find a strong, strategic partner, probably in the U.S. to open the doors to the U.S. market,” he said. He declined to comment specifically on the talks with Yahoo or the government’s role.

Acquisition Strategy

France is attempting to attract foreign investors to aid in its industrial recovery. President Francois Hollande called for the Chinese to invest in France in a speech in Beijing last month after French jobless claims rose to a record high of 3.22 million, the 23rd monthly increase in jobseekers.

Sara Gorman, a spokeswoman for Sunnyvale, California-based Yahoo, didn’t respond to requests for comment. Yahoo in Europe, didn’t immediately respond to an e-mail seeking comment.

Almost a year into her tenure, Yahoo Chief Executive Officer Marissa Mayer is using deals, new products and talent acquisitions to transform the company into a more robust competitor to Google Inc. and Facebook Inc.

The company has bought startups including Jybe Inc. and Summly to improve its products for mobile technology and the Web portal as Mayer works to reverse a decline in display-ad sales where Google and Facebook have become dominant.

Before it's here, it's on the Bloomberg Terminal.