China's LeEco abandons $2 billion deal to buy U.S. TV maker Vizio
(Reuters) - LeEco has scrapped a planned $2 billion acquisition of U.S. consumer electronics company Vizio (VZIO.O: Quote) due to regulatory issues, a fresh setback to the cash-strapped Chinese conglomerate's expansion drive.
The deal was first announced in July, with LeEco agreeing to acquire the Irvine-based manufacturer of LCD/LED flat panel TVs.
A LeEco representative cited a "Chinese policy factor" for abandoning the proposal, but declined to provide further details.
LeEco, one of China's most ambitious companies that grew from a Netflix-like video website to a business empire spanning consumer electronics to cars within 13 years, is struggling to meet its ambitions that include beating Elon Musk's Tesla Motors (TSLA.O: Quote) in premium electric vehicle making.
In recent months, LeEco has faced financial troubles which founder and chairman Jia Yueting has attributed to the rapid pace of business growth, calling it a "big company disease".
Reuters reported last month that LeEco is looking to sell a 49-acre U.S. Silicon Valley property for around $260 million less than a year after buying it from Yahoo Inc YHOO.O to boost liquidity.
It follows a $2.2 billion investment secured in March with backers including property developer Sunac China Holdings Ltd (1918.HK: Quote) to finance its Internet TV and entertainment business.
China has intensified scrutiny of outbound deals over the past several months in an attempt to limit capital outflows and stabilize the yuan. Last month, Chinese conglomerate Dalian Wanda Group's $1 billion deal to buy Hollywood's Dick Clark Productions was terminated, a deal media said had fallen apart due to Beijing's scrutiny on outbound deals.
A new agreement between LeEco and Vizio will now replace the scrapped deal, by which 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. Continued...