Report: Yahoo drops Dailymotion deal in face of French opposition

The French government was opposed to letting Yahoo take a majority stake in the online video site

Yahoo has scrapped plans to invest in French online video site Dailymotion, after the French government opposed the Internet giant's acquiring a majority stake in the company, according to reports.

French Industry Minister Arnaud Montebourg told Yahoo chief operating officer Henrique de Castro and France Telecom chief financial officer Gervais Pellissier during a meeting in April that he did not want a 75% stake in one of France's best startups to be sold to a U.S. Internet giant, The Wall Street Journal reported, citing people briefed on the meeting.

The deal would have valued Dailymotion at $300 million, according to the newspaper.

Earlier, French news reports had also indicated that the French government was opposed to Yahoo acquiring a majority stake in the company.

France Telecom bought 49% of Dailymotion in 2011, to meet increasing demand from customers for video content on mobile devices. The agreement provided for a progressive capital increase to 100% in 2013, which was completed earlier this year, and "the integration of new business partners."

To save the deal, France Telecom executives and government officials tried to turn it into a 50:50 partnership, which the U.S. company declined last week, WSJ reported.

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