Yahoo’s Deal To Buy A $200M Stake In Dailymotion From Orange Scuppered By French Government
It looks like lightning has struck on the towers of Dailymotion. Yahoo’s bid to take a $200 million majority stake in the video site — known as the ‘YouTube of France’ — by buying a stake from carrier France Telecom/Orange has been killed by the French government, which decided that it didn’t want a U.S. company to take a controlling stake in a French operation, TechCrunch has confirmed with a source close to the situation.
Rumors of problems with the deal have been swirling around for weeks. At first it looked like the issues were because of internal disagreements at Yahoo, according to Business Insider. But a report in the French newspaper Le Monde last week noted that Orange had suspended the deal because of opposition from the French state, which owns 27% of the telecom company.
We have confirmed with someone close to the deal that the latter is indeed the case. Our source said that Arnaud Montebourg, the French Minister of Industrial Renewal, effectively told Orange that it could not go through with the deal. “Dailymotion is considered a marquee company in France’s technology industry,” the source said. “Hence, Montebourg didn’t want to let it go to the Americans. He wanted anchorage to stay in France. It’s a shame because all of the growth at Dailymotion is international. It would have been in the best interests of the company. It’s stunning, really.”
Stéphane Richard, who wants to stay at the head of Orange for another term, didn’t want to go through with the deal. In the meantime, Dailymotion won’t be able to keep up with the competition — and especially YouTube — if Orange is not ready to invest more capital in Dailymotion.
The end to the Yahoo deal will have a couple of ramifications. For one, Dailymotion will likely now have to raise money from somewhere — France Telecom or the French government, or perhaps from a national business — in order to invest in its platform. Les Echos estimates that the sum will need to be in the region of €50 million ($65 million).
The alternative to that is to seek out another buyer, probably in France, who would be interested in buying most of France Telecom’s stake, since the carrier had already made it clear that it intended to divest itself of most of that stake when it took it on earlier this year. It’s not clear which company would be a good fit to acquire Dailymotion.
The other is the question of what this might mean for investing in French companies in the future. “The strategic intent was always to find an investor to help them internationally,” said the source. “France Telecom and Dailymotion may now go back to other interested parties to instead take a minority stake, but the issue with that is if you’re a minority investor and you’ve seen the French government do this, why would you invest? It’s a terrible signal to the marketplace. Who in their right mind would go there now? From a signalling standpoint it’s highly concerning.”
As a result, venture capital investments could flatten in the coming months. The government sent a bad signal to French investors.
TechCrunch understands that Yahoo’s interest in Dailymotion had stretched back from before news first broke of it in March. In fact, from what we understand it was even on the table before France Telecom bought its majority stake in January 2013. It may have even been the confidence of that sale going through that encourages France Telecom to step in when it did.
We have reached out to France Telecom for comment and will update this post as we learn more.
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Microsoft may provide up to $3B for Dell buyout, presaging a bigger OEM effort by the software giant
According to Reuters, Microsoft may provide between $1 billion and $3 billion in mezzanine financing, as part of a larger buyout of Dell, helping to take the firm private. In current trading, Dell is worth some $22.85 billion, awarding the theoretical $3 billion investment roughly 13% of the PC manufacturer.
With that percentage of the firm in its pockets, Microsoft, given its current status as Dell’s key partner, would wield massive clout over the company; Microsoft has a recent history of turning minority stakes in firms into strategic affairs, its Facebook purchase being the prime example.
According to Reuters, Silver Lake Partners is the leading contender to take Dell private; Microsoft would participate as a minority partner of the larger deal. Dell itself “has formed a special committee” to parse and vet potential deals. Assuming a premium on Dell’s current stock price, even given the its recent snap rise, would value the deal above the $25 billion mark.
From our previous reporting, here is a short look at Dell’s financial performance:
In its most recent quarter, Dell had revenues of $13.7 billion, and net income of $475 million. The company has around $11 billion in cash, implying a market valuation of its operations – less that cash amount – of under $10 billion. That is a very rough metric, as it doesn’t take into account the company’s debts.
Microsoft: Big, Bad, OEM
Microsoft, by taking a stake in Dell, would be making a statement that its work as an OEM is hardly fleshed out. The Surface project, in terms of unit volume, is diddly when compared to the number of boxes that Microsoft can ship.
And if the firm wants to get into building its own laptops and desktops, or at least guide a partner firm in such a way as to bolster the larger PC market, and thus compete more strongly with Apple, buying Dell would be a fast way to do so; Dell has the supply chain, manufacturing capabilities, and sales channels that are key to have and hard to create.
Microsoft, in theory, could be using its ample cash reserves to help Dell go private out of the goodness of its heart, but we don’t think so.
Top Image Credit: Aanjhan Ranganathan
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Pearson buys 5% stake in NOOK Media, the Microsoft-Barnes & Noble joint venture, for $89.5m; valuing it at $1.8b
A bit of news straight out of left field today that should perk some ears over at Amazon.com HQ: publishing and education company Pearson has announced that it is investing nearly $90 million in cash in NOOK Media, the recently formed e-reading joint-venture of software giant Microsoft and book retailer Barnes & Noble.
The strategic investment deal will see Pearson gain a 5 percent stake in the new firm, which operates all of Barnes & Noble’s digital businesses, including its NOOK e-reader and tablets, digital bookstore and its 674 college bookstores across America.
The investment thus values NOOK Media at just south of $1.8 billion.
Subject to certain conditions, Pearson will earn the option to purchase up to an additional 5 percent ownership in NOOK Media.
What you won’t find in the press release announcing the Pearson investment, but will find in the related 8-K document filed with the SEC today: Barnes & Noble expects holiday 2012 sales results to come in below expectations, and that the Nook business “will not meet the company’s prior projection for FY [Fiscal Year] 2013.”
Microsoft had initially invested $300 million in NOOK Media – then still labeled ‘NewCo’ – in April 2012, acquiring a 17.6 percent stake.
When the Pearson transaction closes, Barnes & Noble will own approximately 78.2 percent of NOOK Media, while Microsoft will own approximately 16.8 percent.
Will Ethridge, CEO of Pearson North America, commented:
“Pearson and Barnes & Noble have been valued partners for decades, and in recent years both have invested heavily and imaginatively to provide engaging and effective digital reading and learning experiences. This new agreement extends our partnership and deepens our commitment to provide better, easier experiences for our customers.
With this investment we have entered into a commercial agreement with NOOK Media that will allow our two companies to work closely together in order to create a more seamless and effective experience for students.
It is another example of our strategy of making our content and services broadly available to students and faculty through a wide range of distribution partners.”
Pearson’s business can be split into three main groups: Education, which includes the company’s digital learning and education publishing offerings, Financial Times Group and consumer publishing unit Penguin Group.
Pearson also holds a 50% stake in the Economist Group.
Image credit: Spencer Platt / Getty Images
Continued here: Pearson buys 5% stake in NOOK Media, the Microsoft-Barnes & Noble joint venture, for $89.5m; valuing it at $1.8b
Expedia Buys Majority Stake In European Hotel Search Site Trivago For $632 Million
Online travel giant Expedia announced this morning that it will acquire a majority stake in Trivago, the Dusseldorf, Germany-based hotel search and price comparison site.
In a regulatory filing, Expedia said it will pay a total of about €477 million Euro, which is approximately $632 million in US dollars, in exchange for a 61.6 percent share of Trivago. €434 million of the deal is in cash, and €43 million is in Expedia stock. The deal is expected to close in the first half of 2013, pending regulatory approval.
Expedia, which is traded on the NASDAQ stock market, has a valuation of approximately $8 billion.
It’s a very good turnout for Trivago, which was founded seven years ago and has grown into an extremely popular — and profitable — hotel room search site for the European market and beyond. Trivago operates in 30 countries and expects to exceed €100 million in net revenue for 2012, according to a press release issued regarding the Expedia deal.
Today’s deal also seems to show a nice boost in valuation for the company since its last funding round. In the spring of 2011, Trivago sold a 25 percent stake to late-stage venture capital firm Insight Venture Partners for a reported €40 million Euro — that’s an overall valuation of €160 million Euro. Today’s stake sale valued the entire company at nearly €800 million.
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Facebook Execs Start Selling Stock: Sandberg Cashes Just ~2% Of Her Stake For $7.4M But CAO Dumps Half
Facebook’s executives gained the right to sell stock this week and three are now starting to cash out. SEC docs show COO Sheryl Sandberg is selling 352,904 shares to pull in $7,440,696.93. That’s just 1.91% of her current, massive stake personal stake and 1.74% if you include her trusts. General Counsel Ted Ullyot is selling a little too. However, Chief Accounting Officer David Spillane is selling over 61%. That’s 256,000 shares out of the 416,000 he was just awarded, which could worry Wall Street.
Rather than make you slog through the SEC documents, here’s what happened:
- COO Sheryl Sandberg is vesting more RSUs, converting Class B to Class A shares, and is selling a small portion of her stake, though more actual shares than the others. She’s selling 352,904 shares, 1.91% of the 18.9 million she received last week after taxes. Specifically her trust is selling 13,392 shares at $20.79 and she’s personally selling 339,512 shares at $21.10 to pull in a total of $7,440,696.93. If you add in her trusts, Sheryl’s total current stake is 20.2 million shares, making this sale 1.74% of her total. If you count her unvested stock she could earn in the future, the percentage she’s announced she’ll sell is less than 1% of her eventual stake.
- General Counsel Ted Ullyot is also vesting more RSUs and converting class b to class A shares, and he his selling 149,075 shares of the 1.4 million he got last week. Specifically he’s selling 142,375 shares at $20.10 and 6,700 shares at $21.14 to bring in a total of $3,003,375.50.
- VP of Engineering Mike Schroepfer is not selling any shares. He filed a Form 4 just to let the SEC know he’s vesting and settling RSUs, and converting B to A shares.
- Chief Account Officer David Spillane is selling 256,000 shares at $21.04 to rake in $5,386240. That’s 61.53% of the 416,000 shares he received last week after taxes. Spillane still has more shares left to vest, so the percentage of his total stake announced for sale today will decrease with time. If all his 974,335 shares vest, today’s sale would amount to 26.3% of his total stake. Still a sizable portion.
The fact that Sheryl is selling such a tiny percent of her Facebook holdings shouldn’t alarm investors. If anything, it should bolster their confidence that such as lauded business woman believes in the future of the social network. It’s still a fair amount of her
On the other hand, Spillane’s sizable dump could be cause for concern. His position close to Facebook’s internal financials could spook some investors into thinking there’s trouble ahead. Then again, Spillane might just have some personal reason for needing to sell now. That could be family debts or upgrading his living situation after somewhat thriftily for an executive of his status.
Facebook is likely trying hard to convince executives and lower-level employees not to sell too much stock, or at least do it gradually. A sudden flood of stock on the market could cause the share price to plummet. Facebook has been working hard to foster hope in its business plan by revealing several big potential money makers over the last quarter. All that work could be undone, though, if execs or legions of teammates liquidate their stakes in the company and Wall Street takes it as a bad omen.
Here’s the SEC Form 4 document Sheryl Sandberg filed today:
[Image Credit: Todd Heisler/New York Times / Redux / eyevine / Guardian]
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