The French telco said it is entering into exclusive negotiations with Vivendi with the aim of finalising a deal that will see it retain a 20% stake in the video sharing site.Based on the terms under discussion, the deal will value Dailymotion at €265 million.

Earlier on Tuesday Vivendi confirmed that it had tabled an offer for the business, but did not provide specifics.

"Our partnership with Vivendi will enable Dailymotion...to accelerate its growth internationally and to enhance its content offer," said Orange CEO Stephane Richard.

Orange held talks with PCCW over a possible partnership, but the Hong Kong-based telco reportedly pulled out when it became clear that Orange was looking for a European partner. Meanwhile, the French press claimed that German media group Axel Springer also submitted an offer for Dailymotion, although there has been no confirmation of that from any party.

There has been much speculation over the future of Dailymotion in recent weeks.

Dailymotion bills itself as the second largest video aggregation and distribution platform in the world, with 2.5 billion video views per month. Market leader YouTube is some way ahead though, with more than 1 billion users and daily views in the billions. Dailymotion generated sales of €64 million last year.

"We are particularly enthusiastic at the idea of supporting Dailymotion in this important new phase of their development as the company evolves into a reference global platform," said Vivendi chairman Vincent Bolloré.

"This is a first step in our ambition to create a large, global group that is focused on media and content," he added.

Total Telecom