Bloomberg News

Yahoo Case Not Against Foreign Investments, Montebourg Says

May 02, 2013

The French government’s decision to block France Telecom SA (FTE)’s sale of its Dailymotion SA unit to Yahoo! Inc. (YHOO:US) isn’t indicative of a harder stance against foreign investments, Industry Minister Arnaud Montebourg said.

France opposed Yahoo’s plan to buy 75 percent of the French video site, with an option for 100 percent, preferring a 50-50 partnership, Montebourg said in a telephone interview today. The government only got involved because of its stake in France Telecom, he said.

The collapse of the Yahoo-Dailymotion talks coincides with efforts by France to attract foreign investors and may raise questions about government intervention. France has been courting overseas investments to help stem rising unemployment, with jobless claims rising to a record high of 3.22 million in March, the 23rd such monthly increase.

“The concerns of foreign investors are unfounded,” Montebourg said. “We are very happy to work with our American friends, it’s a tradition in France.” If other offers for French companies were to come from the U.S., the government wouldn’t interfere “if it wasn’t a shareholder,” he said.

The case is the latest in a string of run-ins Montebourg has had with foreign companies in France. In November, the minister sparked a furor by calling for the nationalization of a troubled local unit of ArcelorMittal, which the world’s largest steelmaker was looking to shut down. In February, Montebourg got into a war of words with Titan International Inc. Chairman Maurice Taylor, who turned down a proposal to buy a tire plant that Goodyear Tire & Rubber Co. is closing in France.

‘Not Blocking’

Paris-based France Telecom will resume its search for a partner for Dailymotion, a person with direct knowledge of the situation said yesterday. The government isn’t aware of whether Yahoo has pulled out of the talks, Montebourg said today.

Yahoo spokeswoman Sara Gorman in Sunnyvale, Calif. declined to comment on the minister’s remarks.

France Telecom Chief Executive Officer Stephane Richard was cited by French daily Les Echos today as saying that Dailymotion is a unit of France Telecom, “and not of the state. It’s the group, its management and its board that are managing the dossier.” The company didn’t immediately return calls seeking comments on the status of the Dailymotion talks.

France owns 26.94 percent of former phone monopoly France Telecom, directly and through its sovereign fund FSI.

France’s efforts for a “win-win” partnership with Yahoo showed the government’s position was “extremely moderate, because it wasn’t meant to block a deal,” Montebourg said. Yahoo is successful in Japan with only a minority stake in its Japanese operations, he added.

Yahoo Unit

That’s why, at a meeting last month with Yahoo Chief Operating Officer Henrique de Castro, “I told Yahoo: ‘You’re welcome, but we need to work together on Dailymotion’s development in the U.S.,” Montebourg said. “We don’t want it to become a unit of Yahoo,” given that the U.S. company “has problems,” the minister added.

The government’s advice on the possible transaction was solicited by France Telecom, Montebourg said.

France Telecom, owner of the Orange brand, bought its initial 49 percent stake in Dailymotion in 2011 for 58.8 million euros ($78 million), and boosted the holding to 100 percent in January this year.

Dailymotion, and partnerships such as a linkup with music service Deezer, were designed to help France Telecom gain access to more content.

Government Difference

Montebourg’s intervention in the Dailymotion sale prompted a response from French Finance Minister Pierre Moscovici, who said today that he will “look more closely” at whether it damages the country’s reputation with foreign investors.

Moscovici said he had a general discussion on the matter with Montebourg while not participating in the decision. The remarks contradicted the industry minister’s comment that the government was aligned on the Dailymotion action.

Montebourg said today that the government has put in place several measures to lure foreign investors, adding that there are 20,000 overseas companies in France.

“Much more than in Germany,” he said.

President Francois Hollande called on the Chinese to invest in France in a speech in Beijing last week.

Montebourg blamed the foreign media for making France seem like an unfriendly place to invest.

“This bashing in the English-speaking media should stop,” he said. “It’s not justified.”

To contact the reporters on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net;


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