China's LeEco abandons $2
billion deal to buy U.S. TV maker Vizio
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[April 11, 2017]
(Reuters) -
LeEco
has scrapped a planned $2 billion acquisition of U.S. consumer
electronics company Vizio due to regulatory issues, a fresh setback to
the cash-strapped Chinese conglomerate's expansion drive.
The deal was first announced in July, with LeEco agreeing to acquire the
Irvine-based manufacturer of LCD/LED flat panel TVs.
A LeEco representative cited a "Chinese policy factor" for abandoning
the proposal, but declined to provide further details.
LeEco, one of China's most ambitious companies that grew from a Netflix-like
video website to a business empire spanning consumer electronics to cars
within 13 years, is struggling to meet its ambitions that include
beating Elon Musk's Tesla Motors in premium electric vehicle making.
In recent months, LeEco has faced financial troubles which founder and
chairman Jia Yueting has attributed to the rapid pace of business
growth, calling it a "big company disease".
Reuters reported last month that LeEco is looking to sell a 49-acre U.S.
Silicon Valley property for around $260 million less than a year after
buying it from Yahoo Inc to boost liquidity.
![](http://archives.lincolndailynews.com/2017/Apr/11/images/ads/current/cca_laptop-sda021709.png)
It follows a $2.2 billion investment secured in March with backers
including property developer Sunac China Holdings Ltd to finance its
Internet TV and entertainment business.
China has intensified scrutiny of outbound deals over the past several
months in an attempt to limit capital outflows and stabilize the yuan.
Last month, Chinese conglomerate Dalian Wanda Group's $1 billion deal to
buy Hollywood's Dick Clark Productions was terminated, a deal media said
had fallen apart due to Beijing's scrutiny on outbound deals.
A new agreement between LeEco and Vizio will now replace the scrapped
deal, by which the companies will incorporate LeEco's app and content
within Vizio's platform, and bring Vizio products to the China market,
LeEco said on Tuesday.
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![](../images/041117pics/busine29.jpg)
LeEco's new Le Pro3
phone is on display during a press event in San Francisco,
California, U.S. October 19, 2016. RETUERS/Beck Diefenbach
![](http://archives.lincolndailynews.com/2017/Apr/11/images/ads/current/graue_17_cruze_040317.png)
Some
observers welcomed the withdrawal of the Vizio acquisition plan, saying it is
good for LeEco which has owed suppliers money and recently had a sports
broadcasting contract terminated due to an unpaid installment.
"At some stage, when they're more cash ready they can think again about
acquiring... In the meantime, they can get this partnership going," said Neil
Shah, a research director at Counterpoint Research.
The unspent money will also likely help LeEco rekindle its supply-chain
partnerships to resume full-scale production, especially since fourth quarter
phone shipments were scaled back due to the cash crunch.
The company shipped less than a million phones globally in the fourth quarter of
last year, when it normally shipped close to 4 million to 5 million per quarter
in 2016, according to data from Counterpoint Research.
Late on Monday, LeEco's listed unit Leshi Internet Information & Technology Corp
Beijing said first-quarter net profit was expected at between 103 million and
132 million yuan, versus 114.7 million yuan ($17 million) profit a year earlier.
(Reporting by Jess Macy Yu in TAIPEI; Additional reporting by Ismail Shakil in
BENGALURU and Cate Cadell in BEIJING; Editing by Randy Fabi and Muralikumar
Anantharaman)
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