LeEco’s US$2bn takeover of Vizio called off

LeEco’s planned US$2 billion takeover of US TV maker Vizio has been called off, with the company citing “regulatory headwinds” to completing the deal.

In place of the takeover, China-based LeEco will still co-operate with Vizio, with the company to give access to its content ecosystem on Vizio TVs, as well as possibly bringing Vizio products to the Chinese market.

“In recent months, there has been a significant amount of speculation about the financial situation of LeEco and how it might negatively impact the conclusion of the deal with Vizio,” said IHS Markit in a research note responding to the news.

“In addition, there was information to suggest the Chinese government might be the one holding up the approvals.”

The note claims that the deal represented a quick way for LeEco to establish an overseas business and without Vizio it will be “more challenging for LeEco to organically grow its US sales – particularly for TVs”.

Vizio, it argued, will continue with a “business as usual” strategy in North America, where it has high market share for TV sales.

LeEco and Vizio announced a definitive agreement under which LeEco would acquire Vizio for US$2 billion in July 2016. Vizio’s hardware and software businesses was to be owned and operated as a wholly owned subsidiary of LeEco, while the Vizio data business, Inscape, was due to spin out and operate as a separate, privately owned company.

LeEco manufactures TVs, smartphones and accessories like headphones, while Vizio offers TVs, displays and audio equipment like soundbars and multi-room speakers.