Yahoo scraps Dailymotion bid after French govt concerns -reports

SAN FRANCISCO, April 30 Tue Apr 30, 2013 8:44pm EDT

SAN FRANCISCO, April 30 (Reuters) - Yahoo Inc has abandoned an effort to acquire a majority stake in online video website Dailymotion due to objections by the French government, according to media reports, scrapping what would have been the biggest deal in the 10-month tenure of Yahoo CEO Marissa Mayer.

Yahoo had been in talks to buy a 75 percent stake in Dailymotion, owned by telecommunications company France-Telecom Orange, in a deal that would have valued the video website at $300 million.

But French government officials raised concerns that the country would lose control over one of its biggest Internet industry successes in such a deal, according to a person familiar with the matter.

French government officials and France Telecom executives sought to arrange a deal in which Yahoo would take a 50 percent stake instead, but Yahoo balked, the Wall Street Journal reported on Tuesday.

Yahoo and Dailymotion declined to comment on the matter.

Dailymotion is among the most popular online destinations for video, although it lags far behind Google Inc's YouTube, the world's dominant video website.

News that the deal was running into trouble was first reported by French media last week.

France Telecom-Orange acquired Dailymotion for $170 million through a two-phase deal, with the most recent transaction closing in January. Dailymotion's editorial and executive management operate independently of France Telecom-Orange.

Online video, which commands higher ad rates than traditional Web content, is increasingly important to Yahoo as it seeks to reverse a multiyear decline in revenue and visitor traffic.

Mayer, who took the reins of the struggling Internet pioneer in July, has so far focused her acquisition efforts on scooping up small, mobile start-up companies.

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