LeEco (formerly LeTV) of China has announced a definitive agreement to acquire US TV brand Vizio, for $2 billion. LeEco will operate the Vizio hardware and software business as a wholly-owned subsidiary. Vizio’s data business, Inscape, will be spun out and operated independently.
“Acquiring Vizio is an important step in our globalization strategy and building our North American presence,” said LeEco CEO YT Jia. For its part, LeEco will provide Vizio with global scale and brand recognition.
Vizio’s executive management team will remain in place, and the company will continue to be based in Irvine, California. Products will continue to be sold through its existing distribution channels. CEO and founder William Wang will transition to chairman and CEO of Inscape.
The acquisition is expected to be closed in Q4’16, subject to the customary closing conditions.
Analyst Comment
The combination of businesses of Vizio and LeEco will push the merged company past Skyworth in global TV sales, making it the world’s sixth-largest TV brand.
Paul Gagnon of IHS points out that, with the completion of the acquisition, LeEco will effectively ‘shortcut’ the learning curve required to enter the US TV market, where Vizio has more than a decade of experience. The company’s biggest challenge will be convincing Vizio’s retail customers that it will be ‘business as usual’ during the integration.
Competitors are likely to be affected if LeEco applies its Chinese business model to the North American market. In China, the firm focuses on growing its paid subscription content, selling TV hardware at below the manufacturing cost – or even for free during some promotional periods. (TA)
