France firm Vivendi jumps into ob­sta­cle race for Dai­lymo­tion

The China Post - - WORLD BUSINESS - BY MAR­I­ANNE BAR­RI­AUX

France’s Vivendi said Tues­day it had en­tered into “ex­clu­sive talks” to buy 80 per­cent of Dai­lymo­tion af­ter Paris thwarted at­tempts by Ya­hoo and a Hong Kong tele­coms gi­ant to buy a stake in the video- shar­ing site.

The of­fer from a French firm is likely to be more palat­able to the gov­ern­ment, in a coun­try that is strug­gling to foster home­grown high-tech cham­pi­ons at a global level as its nu­mer­ous start-ups of­ten end up be­ing snapped up by for­eign com­pa­nies.

The YouTube equiv­a­lent, which be­longs to tele­coms group Or­ange, has long gen­er­ated in­ter­est from com­pa­nies far and wide but the French gov­ern­ment has fer­vently pro­tected its na­tional tech­nol­ogy jewel, say­ing it would pre­fer to see it re­main in Euro­pean hands.

Quick- off- the- mark, Vivendi an­nounced Tues­day it had made an of­fer to Or­ange for Dai­lymo­tion — one of the 100 mostvis­ited web­sites world­wide.

The two firms said later Tues­day in a joint state­ment they were “in ex­clu­sive talks con­cern­ing the ac­qui­si­tion by Vivendi of 80 per­cent of the cap­i­tal in Dai­lymo­tion for 217 mil­lion eu­ros” (US$235 mil­lion).

The price would value the whole of Dai­lymo­tion at around 265 mil­lion eu­ros.

‘Euro­pean cham­pion’ Pre­ferred

France caused a furor in 2013 when it blocked a bid by U.S. gi­ant Ya­hoo to ac­quire Dai­lymo­tion.

Ya­hoo Inc. had been in talks to buy a 75-per­cent stake in Dai­lymo­tion, but the gov­ern­ment, which holds al­most 25 per­cent of Or­ange, had in­sisted on a 50-50 split.

Then Industrial Re­newal Min­is­ter Ar­naud Mon­te­bourg, a mav­er­ick widely viewed as an­tibusi­ness who has since been forced out of the gov­ern­ment, had said he blocked the deal be­cause the U.S. firm was seek­ing to “devour” the French com­pany.

His move dealt a blow to France’s busi­ness im­age at a time when the strug­gling coun­try was try­ing to at­tract in­vest­ment and kick­start a mori­bund econ­omy.

Then last week Econ­omy Min­is­ter Em­manuel Macron, a for­mer in­vest­ment banker viewed as pro-busi­ness, raised eye­brows when he came out against ex­clu­sive talks be­tween Or­ange and the PCCW con­glom­er­ate owned by the son of Hong Kong ty­coon Li Ka-shing.

He ac­knowl­edged that the PCCW of­fer “could be a good op­tion,” but “I want to be sure that we don’t have a Euro­pean cham­pion that we can build onto this plat­form,” he told French tele­vi­sion.

PCCW had planned to turn Dai­lymo­tion into a YouTube com­peti­tor in Asia, but Macron warned this meant the French video- shar­ing site would even­tu­ally turn into a Chi­nese plat­form.

Dis­cour­aged by the min­is­ter’s com­ments, the Hong Kong firm an­nounced Mon­day it had ended its bid for Dai­lymo­tion.

“The de­sire of the French gov­ern­ment to en­cour­age the search for a Euro­pean so­lu­tion dis­cour­ages par­tic­i­pa­tion of in­ter­na­tional com­pa­nies,” PCCW said in a state­ment ex­plain­ing its de­ci­sion.

Tool for French In­flu­ence

Abroad

The gov­ern­ment’s re­luc­tance to give up Dai­lymo­tion to U.S. or Hong Kong firms has some in France scratch­ing their heads, par­tic­u­larly as it al­lowed the sale of a near 50-per­cent stake in the strate­gic air­port of Toulouse to a Chi­nese con­sor­tium in De­cem­ber.

But Pas­cal Perri, an ex­pert in the dig­i­tal econ­omy, said it made sense.

“Toulouse air­port can­not be de­lo­cal­ized, it’s here to stay whereas Dai­lymo­tion is a tool for France’s in­flu­ence abroad, which is im­por­tant,” he said.

Other com­pa­nies have also ex­pressed an in­ter­est in Dai­lymo­tion, ac­cord­ing to sev­eral me­dia re­ports, in­clud­ing French hold­ing firm Fi­malac and Ger­man group Ber­tels­mann.

Founded in 2005 by two French en­trepreneurs, Dai­lymo­tion is the 85th most vis­ited site in the world, ac­cord­ing to web traf­fic data provider Alexa. YouTube is the third.

It is avail­able in 18 lan­guages, is strongly present in Asia but is not yet prof­itable.

“Dai­lymo­tion’s suc­cess is not com­pa­ra­ble to YouTube be­cause YouTube latched onto a huge com­pany that is now one of the main mar­ket cap­i­tal­iza­tions in the world,” Perri said, re­fer­ring to Google.

“Google is a strate­gic tool for Amer­i­cans and when Obama talks about it, that’s how he talks about it. It’s good that we have the same rea­son­ing.”

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