A multi-billion dollar deal between a struggling Chinese technology conglomerate and US television maker Vizio has fallen apart.
LeEco said Monday that a proposed two-billion-dollar acquisition of Vizio “will not proceed due to regulatory headwinds.”
LeEco and Vizio, however, have struck a new collaboration agreement that includes bringing Vizio products to the Chinese market, according to a brief emailed statement from the Chinese company.
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A LeEco representative reached by Reuters on Tuesday cited a "Chinese policy factor" for abandoning the proposal.
The deal to buy Irvine, California-based Vizio was first announced in July.
"LeEco’s pullback from the Vizio acquisition isn’t surprising,” Thilo Hanemann, an economist for Rhodium Group, a research firm, told the Los Angeles Times.
“Chinese capital controls currently make it difficult to move 2 billion dollars offshore and a company with LeEco’s problematic balance sheet should have tremendous difficulties raising funds for such a deal.”
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Vizio Chairman and Chief Executive William Wang founded Vizio in 2002 as an answer to what he deemed overpriced TVs. Funded by venture capital and a home loan, Wang kept costs low by leaning on Asian hardware manufacturers. Vizio found success after landing a major deal to distribute sets at Costco.
By buying Vizio, LeEco would have gained a well-known US brand known for selling relatively cheap consumer electronics. However, LeEco has reportedly struggled with its finances as it attempts to meet the grand ambitions of its charismatic CEO Jia Yueting.
Jia told his employees in a letter last fall that LeEco was running low on cash and succumbed to what he described as a “big company disease.”
