Yahoo! (NASDAQ:YHOO) CEO Marissa Mayer clearly believes in the power of acquisitions. She already has pulled off a variety of small deals — such as for Stamped (tracks a user’s interests like books and movies) and Snip.it (a platform to share news articles) — but she still wants to strike some transformative acquisitions … which naturally has sparked plenty of speculation.
One of the latest possibilities came from a piece in the Wall Street Journal. Mayer reportedly is in talks to get a 75% stake in Dailymotion, a top video-sharing site. The property, which currently is owned by France Telecom (NYSE:FTE), could fetch about $300 million.
A former executive at Google (NASDAQ:GOOG), Mayer probably has a decent read on Internet video. Google purchased YouTube back in 2006 for $1.65 billion and it has gone on to be a key to its growth ramp. According to Internet analyst Mark Mahaney, the site was expected to generate about $3.6 billion in gross revenues in 2012.
The Video Biz
Video is proving to be a killer app for mobile; YouTube, for instance, is ranked No. 12 on Apple’s (NASDAQ:AAPL) App Store. But other big players have gotten into the act, such as Twitter, which recently launched the six-second-video app Vine that’s now ranked 10th.
So it would be a sound move on Mayer’s part to make a bid for Dailymotion. According to comScore, the site is the 12th most-traveled video platform in the world with about 116 million unique visitors per month. Much of its user base is outside of the U.S., including Europe and Asia.
Yahoo! could provide some nice synergy with Dailymotion. Yahoo and Dailymotion already have a deal for content syndication, and YHOO can expand the video site’s footprint in the U.S. market, where it’s No. 22.
YHOO also could leverage its deep entertainment assets, like omg! A critical part of growth for online video will be premium content, which should command stronger ad revenues. And lastly, Yahoo! should be helpful in building mobile apps for Dailymotion.
Obviously, a deal isn’t a lock. We still could see a breakdown in negotiations, or another bidder could come to the table, such as Google or Facebook (NASDAQ:FB).
And while YHOO shares aren’t revving over the news, perhaps its because they’ve already run 40% in the past six months.
Still, investors should be excited over the potential for this deal. Dailymotion would give mayer’s company a better foothold in a fast-growing sector, there are clear synergies to be made, and it would help give YHOO more lift in the mobile space.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.