LeEco Scraps $2 Billion Aquisition of Electronics Company Vizio

By Vishal Goel, | April 11, 2017

LeEco Chairman, Jia Yueting, admitted last year that the company had been facing a cash crunch and got over-extended in its global strategy.  (Michael Rehfeldt/CC BY 2.0)

LeEco Chairman, Jia Yueting, admitted last year that the company had been facing a cash crunch and got over-extended in its global strategy. (Michael Rehfeldt/CC BY 2.0)

Chinese technology major LeEco has called off its expected $2 billion acquisition of the US consumer electronics company Vizio, citing "regulatory headwinds."

LeEco Chairman, Jia Yueting, admitted last year that the company had been facing a cash crunch and got over-extended in its global strategy. The company has also been accused of lagging on payments to suppliers and delaying employee salaries.

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The deal, first announced in July, was finalized after LeEco agreed to acquire the Irvine-based manufacturer of LCD/LED flat panel TVs.

LeEco, one of China's most ambitious companies, saw a massive growth from a Netflix-like video website to a business empire spanning consumer electronics to cars within thirteen years. However, it is now struggling to meet its ambitions, which include beating Elon Musk's Tesla Motors in premium electric vehicle making.

In recent months, LeEco has faced financial troubles, which its founder and chairman Jia Yueting attributed to the rapid pace of its business growth, describing it as a "big company disease." Also, LeEco is looking to sell a 49-acre Silicon Valley property for around $260 million less than a year after buying it from Yahoo Inc. This follows a $2.2 billion investment secured in March, with backers including property developer Sunac China Holdings Ltd agreeing to finance its business.

According to a new agreement between LeEco and Vizio, 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.

Some people have welcomed the withdrawal of the Vizio acquisition plan, commenting that it is a good decision by LeEco. Neil Shah, a research director at Counterpoint Research, said that LeEco could think again about acquiring when they are more cash-ready, and in the meantime, they can get this partnership going.

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