LeEco, a Chinese electronics company taking a number of steps to claim some foothold in the U.S. market will no longer acquire Vizio, one of the most recognized names in TV manufacturing. The deal had been valued $2 billion previously, but both companies have now jointly announced that the deal has been called off because of "regulatory headwinds."
LeEco And Vizio Deal Dead
The deal was first announced in July 2016, but several months of hurdles related to regulation, alongside a number of factors, have resulted in this upshot. Both companies remain laconic as to what specific regulatory hurdles contributed to the collapse of the deal, but reports surmise difficulty with China's tightened stance of outbound purchases as the primary reason.
Before the buyout, Vizio was reportedly planning to go public, but such plans had been derailed by the impending acquisition. With the deal called off, Vizio remains as a private U.S. enterprise. It is known for its low-cost TVs, although the business has expanded on other consumer electronics such as computers, tablets, and smartphones.
Both Companies Will Remain Bedfellows
LeEco and Vizio's relationship isn't over, however: the two have now struck a collaboration agreement that includes pushing Vizio products to the Chinese market. But LeEco has yet to announce the path that will enable such a plan.
Meanwhile, the agreement will also allow for the two companies to "explore" continued partnership centered around content, with the help of LeEco's network of content via Vizio's connected app ecosystem and distribution platform.
"We continue to believe that there is great synergy between the two companies," the statement said.
The collapsed deal is of utmost misfortune to LeEco; its Vizio acquisition would have immensely helped it break into the U.S. market, a venture the company is aggressively partaking, having released its range of smartphones and smart TVs stateside recently.
Who Is LeEco?
LeEco is often coined as the "Netflix of China," considering its significance in the country, particularly with its LeTV video service. LeTV is the primarily cash cow putting dough in its coffers, which is the leveraged to fund other fronts such as consumer electronics, movie productions, automotive manufacturing, and other areas.
It's far from over for LeEco, however, even if the called-off deal might have hurt its U.S. prospects. In January, the company secured a $2.18 billion investment from Sunac China Holdings, a property developer. This should ensure ample cash for LeEco moving forward as it pivots to other ways to introduce and make a name for itself stateside.
Although specific reasons for the fallout weren't disclosed, it's worth assuming that it might have stemmed from Chinese agencies tightened scrutiny of outbound purchases over the past several months, which aligns with a tighter-wrung government hand to limit capital outflows.
It's unclear how LeEco is planning to make U.S. inroads following the deal's collapse, but expect due coverage when the company announces such plans.
Thoughts about LeEco and Vizio's botched $2 billion deal? Feel free to sound off in the comments section below!
