Under the proposed agreement Vivendi would buy 80% of Dailymotion for €217 million (US$234 million) and Orange would retain the other 20% stake in the company.
The two companies hope to finalise the deal after a "period of exclusive negotiations" plus consultation with employee organisations, Vivendi said in a statement.
The announcement comes shortly after discussions ended between Orange and another potential buyer, PCCW of Hong Kong. The French government had intervened, asking that Orange look into "all the options" before choosing a non-European buyer, the Financial Times said.
“An environment where policies appear to favour a French or European solution is discouraging for international business participation,” PCCW said in a statement explaining its decision.
In 2013, the French government also blocked Yahoo from buying 75% of the site, Forbes said.
"For Vivendi, the acquisition of 80% of Dailymotion's capital represents an important step forward in its effort to create a global group and French champion in the media and content industries, Vivendi said.
Vivendi sees "numerous opportunities" for collaboration between Dailymotion and Vivendi businesses including music recording and publishing business Universal Music Group, and film and television studio and distributor Groupe Canal+, to "accelerate and reinforce Vivendi's workdwide presence", it said.
"For Orange ... this operation meets the group's ambition to bring Dailymotion together with a strategic content-focused partner that is capable of giving it the means to accelerate its growth and to turn it into one of the world's largest content distribution platforms," the statement said
Orange said it will use the proceeds of this transaction to finance and reinforce its efforts in its digital business.
Dailymotion is available in 18 languages, and has 35 localised versions. It has 128 million