LeEco To Buy US TV Manufacturer Vizio For $2 Billion This Year
Chinese technology company LeEco (SZSE: 300104) will purchase US television manufacture Vizio (NASDAQ: VZIO (not trading)) in a deal worth $2 Billion USD set to close in the fourth quarter of this year.
LeEco plans to acquire Vizio's hardware and software divisions and run the US company as a wholly owned subsidiary while spinning off Vizio's Inscape television viewership data arm as a privately held company. With approximately 400 employees, yearly revenue in the billions ($3.1 billion in 2014), and at least 20% of the US television market, the acquisition would allow LeEco to enter the US market in a big way. Vizio is best known in the US for its televisions where it is a respected brand, but the company also produces ultrabooks, tablets, smartphones, and sound bars. It is a private US-based company with manufacturing in Mexico and China.
Founded in 2004, LeEco is involved in a number of technology related fields across China, India, and soon the US. The Vizio brand (and partnerships such as the one with Walmart to carry its TVs) alone will be instrumental in LeEco's plans to break into the US market which has been resistant to Chinese brands making inroads (Lenovo apparently being the exception, but even Lenovo was not able to get its smartphones into the US market in a big way). The company of 5000+ employees is involved in Internet TV, video production and distribution, e-commerce, smartphones, tablets, gadgets, home automation, and even (soon) driverless cars.The company had 2014 revenue of $1.6 billion.
It is interesting to see all of the buy outs of US tech companies by overseas companies. To be clear, I don't necessarily think that these deals are a bad thing or being done with malicious intentions, but they do piques my curiosity. In this case it could be a good partnership that would allow both companies to benefit with LeEco getting a strong US brand and the recognition and market trust that entails and Vizio getting a much larger staffed company with experience in Chinese markets where it could help Vizio push its smart TV platform and ultrabooks and phone aspects further. Here's hoping that a LeEco owned Vizio grows and maintains its quality and price points.
What do you think about LeEco buying out Vizio? What will the future hold for the US TV maker?