China’s LeEco calls off Vizio acquisition
Chinese tech giant LeEco has cancelled its planned $2bn acquisition of US smart TV manufacturer Vizio citing “regulatory headwinds”.
LeEco announced the acquisition last July as part of its expansion into the North America market, which also included a partnership with electric vehicle company Faraday Future and building a huge office complex on land acquired from Yahoo.
LeEco and Vizio both said they still intend to work together on an app partnership and closer collaboration in China. LeEco needs access to US smart TVs to distribute its EcoPass streaming subscription service, while Vizio doesn’t currently have a large footprint in the China market.
In a joint statement, the two companies said: “Under the new agreement, LeEco and Vizio will continue to explore opportunities to incorporate the Le app and content within the Vizio connected CE platform, and engage in a collaborative partnership to leverage LeEco’s EUI (Ecosystem User Interface) platform, along with the brand’s exclusive content and distribution channels, to bring Vizio products to the China market.”
Chinese regulators have recently been clamping down on big cross-border deals. Dalian Wanda Group’s planned acquisition of US production company Dick Clark Productions and a financing deal for US studio Paramount, involving Shanghai Film Group and China’s Huahua Pictures, have also recently been scrapped.
However, LeEco has also had a highly visible cash crunch, as a result of expanding too quickly into North America and other markets. Reuters reported in March that LeEco is looking to sell its Silicon Valley property. The company recently secured $2bn from investors including property developer Sunac China Holdings, but the financing may not be enough to keep all its expansion plans afloat.
It remains unclear how Vizio, which had been planning an IPO before the LeEco deal was announced, will react to the cancelled acquisition. It could now pursue the IPO route again or seek another buyer. Back in 2015, Vizio chairman and CEO William Wang reportedly held a 54% stake in the company, while Taiwanese manufacturing partners AmTran and an affiliate of Foxconn held around 30%.