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article imageTroubled LeEco abandons plans to acquire U.S. TV brand Vizio

By James Walker     Apr 11, 2017 in Technology
Chinese tech company LeEco has announced it is abandoning its plans to acquire U.S. TV manufacturer Vizio in a deal that was valued at $2 billion. LeEco is struggling to sustain its vast operations, grown from nothing in a matter of years.
LeEco's intentions to acquire Vizio were announced last July. The deal was interpreted as an attempt by LeEco to gain a significant presence in the U.S. consumer electronics industry, a market it has repeatedly signalled interest in.
Under the terms of the deal, LeEco would have acquired the manufacturing rights and property of Vizio, an established LCD and LED TV firm. Reuters reports that regulatory issues have prevented the transaction from proceeding, news which casts further doubt on LeEco's ability to execute overseas.
In less than fifteen years, LeEco has grown from a small Internet company into one of China's biggest producers of electronic devices. After starting out as a video streaming site similar to Netflix and YouTube, LeEco has expanded dramatically into a myriad of divisions. It produces smartphones, connected home products, VR headsets, bicycles and electric cars, amongst many other kinds of hardware.
Despite its current scale, the company's extraordinary pace of growth has recently caught up with it. LeEco's cash is now dwindling away as the company realises it's unable to sustain its rate of development. LeEco has been concentrating on establishing its brand in Western markets, something the Vizio acquisition would have assisted with. It will now be left struggling to acquire a name for itself alongside other Chinese brands including Huawei, Xiaomi and ZTE.
Last year, LeEco launched its Le Pro 3 flagship smartphone in the U.S., offering a high performance phone for just $399. The company promised an entire ecosystem of devices, built around its unique technology and software services. Analysts were again sceptical of the company's ambitions, noting U.S. consumers aren't currently looking to replace all their tech with products from a single emerging brand.
Earlier in 2016, LeEco had attempted https://arstechnica.co.uk/gadgets/2017/04/regulatory-headwinds-shut-down-leecos-2-billion-purchase-of-vizio/ t=_blank]to establish itself as a major resident of Silicon Valley. It purchased $250 million of land from Yahoo to build an "EcoCity" for 12,000 employees. By the fall, the company had admitted it was unable to pay its suppliers and began to work out how to sell the property.
LeEco and Vizio will continue to pursue a "partnership" that will see the two firms collaborate on minor product details. LeEco's "Le" app will [url=http://www.theverge.com/2017/4/10/15246058/leeco-vizio-acquisition-cancelled t=_blank]come preinstalled
on Vizio smart TVs and the company will assist Vizio to launch its products in China.
Some analysts have suggested that withdrawing from the Vizio purchase could end up being beneficial for LeEco. By releasing the $2 billion prepared to go into the deal, LeEco could stabilise other areas of its business and pay off outstanding debts to its suppliers. The company has been forced to limit production of its devices after failing to pay its manufacturers and partners, causing it to become trapped in a vicious cycle of decline.
More about leeco, Vizio, Televisions, China, Acquisition
 
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