LeEco drops Vizio deal, US earnings fall short - Mobile World Live

LeEco drops Vizio deal, US earnings fall short

11 APR 2017

Chinese content and devices firm LeEco abandoned a planned $2 billion acquisition of US consumer electronics maker Vizio due to “regulatory headwinds”, as it fell short of a $100 million revenue goal in the US, Bloomberg reported.

“The merger agreement to acquire Vizio will not proceed due to regulatory headwinds,” the companies said. “We continue to believe that there is great synergy between the two companies.”

LeEco is now looking into other ways to incorporate its content into Vizio’s devices, Bloomberg reported.

The deal was announced in July 2016. At the time, billionaire Jia Yueting, founder, chairman and CEO of LeEco (pictured) said acquiring Vizio was “an important step in our globalisation strategy and building our North American presence.”

In a separate, related, article, Bloomberg reported the company generated US revenue of less than $15 million in 2016 after debuting in the country in October, well short of the $100 million it aimed for.

The US unit is reportedly planning to layoff 175 workers and recently delayed staff payments.

Capital crunch
In late March it was reported the Vizio deal was in trouble because LeEco faced funding problems after rapid growth, and encountered difficulties closing the deal due to new restrictions on capital transfers out of China.

Jia acknowledged in November 2016 the company had been expanding “too fast” and its capital and resources were not keeping pace, following an aggressive move into smartphones, smart TVs and electric cars.

A month later LeEco said it was planning to restructure its business following the suspension of trading of its shares on the Shenzhen Exchange after its stock dropped nearly 8 per cent.

Commenting on the Vizio report, Chris Dong, research director at IDC China, told Bloomberg: “I think that the Chinese government sees Vizio as having no value-add to the Chinese market in the future. If they acquire Vizio they will probably have a bigger platform to play in the US, but that would require more money coming from China continuously.”


Saleha Riaz

Saleha joined Mobile World Live in October 2014 as a reporter and works across all e-newsletters - creating content, writing blogs and reports as well as conducting feature interviews...More

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