LeEco Acquisition of Vizio Officially Off
LeEco chairman Yueting Jia and Vizio chairman William Wang in happier times.
LeEco’s acquisition of U.S. television manufacturer Vizio has been officially canceled due to Chinese regulatory issues, although the companies will continue with a scaled-down partnership that will see LeEco partnering to sell Vizio products in China, LeEco said in a statement today.
The deal, which was announced with much fanfare last summer, took many more months than expected to be finalized, and Chinese news service Caixin recently reported that the deal was being threatened by a combination of tighter currency restrictions imposed by the Chinese government and LeEco’s own cashflow problems.
In a statement issued Monday LeEco said: “We continue to believe that there is great synergy between the two companies, and are pleased to announce that LeEco and Vizio have reached an agreement that is a win for both companies.”
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 Ecosystem User Interface (EUI) platform, along with the brand’s exclusive content and distribution channels, to bring Vizio products to the China market.”
Read more on the end of LeEco’s Vizio acquisition deal after the jump:
Under the revised deal, both LeEco and Vizio will continue to operate as separate, independently owned and operated entities, with Vizio’s operations continuing under the same management team headquartered in Irvine, Calif.
Rumors that the deal might be falling apart began late last year, as the expected dateline for completion came and passed by.
Last week Bloomberg reported that LeEco’s problems getting cash out of China had forced a delay in meeting payroll for its U.S. employees.
When the $2 billion deal was originally announced, the companies had expected it to consummate before the fourth quarter of 2016. But the Chinese government, concerned about huge outflows of cash at a time when the explosive growth in the Chinese economy was slowing down, would not give its approval.
When the deal was first announced, LeEco founder and CEO Yueting Jia said LeEco planned to use the acquisition of the No. 2-ranked U.S smart TV company to build an ecosystem for the delivery of content, internet services and home theater hardware to a global market place. The company said the acquisition of Vizio would make it the world’s largest internet TV access point.
Much has happened to both companies in the intervening months. LeEco struggled to raise the cash needed to acquire land it had planned for some of its operations in the U.S. and the company’s hugely expensive feature film “The Great Wall,” starring Matt Damon, failed to generate the box office returns expected in both the U.S. and China.
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Vizio, meanwhile, paid $2.2 million to settle a lawsuit and investigation by the Federal Trade Commission (FTC) and the New Jersey Division of Consumer Affairs (NJ) into alleged data-mining practices through its smart TVs.
Vizio still faces a class action lawsuit brought by more than a dozen consumers who allege they were sold Vizio smart TVs without being told that Vizio was using those devices to monitor their television viewing habits and then selling the collected information to third parties, who could possibly trace their IP addresses and identify them for unwanted solicitations and other purposes.
Last month, Vizio was also named by Broadcom in a patent infringement lawsuit along with LG and various IC chip makers for allegedly using its intellectual property in various devices used for decoding and processing images on television sets.
LeEco had hoped that Vizio would help it fast-track its way into U.S. market using Vizio and LeEco TVs, which could be used to sell streaming content and advertising through its own cloud services and partnerships with other over the top (OTT) streaming service providers. The company was also expected to piggyback LeEco marketing efforts on Vizio’s retail relationships in the U.S., which include such major accounts as Best Buy, Walmart, Target, Costco, BJ’s, Sam’s Club and others, that represent the bulk of the brick-and-mortar sales of television in the United States today.
By Greg Tarr
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