Business / Companies

LeEco to buy TV producer Vizio for $2b

By Lia Zhu and Ma Si (China Daily) Updated: 2016-07-28 08:52

Move forms part of the firm's 'big bang plan' to enter the market in the United States

LeEco Global Ltd announced on Tuesday that it will acquire Vizio Inc, a major TV manufacturer in the United States, for $2 billion in cash as it expands globally.

It took the two companies three years to reach the agreement, under which Vizio's hardware and software businesses will be operated as a wholly owned subsidiary of LeEco Holdings Ltd, while the data business, Inscape, will operate as a separate, privately owned company. LeEco Global will own a 49 percent stake of Inscape, and William Wang, founder and CEO of Vizio, will own a 51 percent stake.

With the acquisition, LeEco is expected to have more than 20 million big-screen users, which will provide a solid foundation for the Beijing-based company to expand its presence in the US and realize its global strategy, Jia Yueting, founder and CEO of LeEco, said at a news conference in Hollywood.

LeEco will retain all current Vizio employees and enter into a 10-year licensing agreement with Inscape. The Vizio brand and its products will continue to be sold through their existing distribution channels.

The transaction, which is expected to close in six months or so, will be subject to regulatory approval. It highlights LeEco's ambition to take on Apple Inc and Tesla Motors Inc in these international giants' home turf.

Vizio, based in Irvine, California, is the second-largest smart TV vendor in the US. Known for its affordable flat-screen TVs, Vizio has factories in Mexico and China.

After the acquisition, Vizio will provide LeEco with approximately 8 million newly installed internet-connected TVs annually as well as access to major North American retail channels. LeEco will support Vizio with its internet, technology, content and cloud services.

Winston Cheng, LeEco senior vice-president, global head of corporate finance and development, said the two companies had combined revenue of more than $4 billion in the first half of 2016, and the group expects double-digit revenue growth over the next few years.

LeEco has set its sights on the US market in recent months. In April, it opened a North American headquarters in San Jose, California, with the objective of tapping into Silicon Valley's talent and innovation. The facility houses the company's autonomous driving research center-the LeFuture AI Institute, in partnership with Faraday Future.

LeEco recently completed the acquisition of Yahoo Inc's nearly 20-hectare development site in Santa Clara, California, with a payment of $250 million, according to a report by Silicon Valley Business Journal last month.

"Within three months, LeEco will formally enter into the US," said Jia, who called it a "big bang plan".

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