China-based LeEco Global Ltd has agreed to buy Vizio Inc., a US-based TV brand, for $2 billion—a move that would help LeEco to expand its services to the world’s biggest economy.
The Chinese tech giant will settle the deal with Vizio through cash payment. The move is part of LeEco’s expansion strategy to enter North America, with its offerings ranging from smartphones, hardware, TV, driverless cars, to sports and online entertainment content and film. The company currently offers services in India and China only.
While talking to reporters at press conference in Los Angeles, LeEco CEO Jia Yeuting said: “I hope we can lead the future of the Internet ecosystem era.” William Wang, founder and CEO of Vizio said he is “excited to see how LeEco's global reach and resources will elevate Vizio.”
The acquisition will help LeEco to tap the growing potential of technology market in the US. The company may also face headwinds due to fierce competition and the image of its brand. Some argue it needs to ensure a better and quality brand image, especially following the takeover.
Analysts seem divided over the price tag. Some say the bid is too high for an American TV brand, while others believe the offer to be fair as the Chinese company is likely to gain more in terms of business expansion and future growth.
"LeEco is the world’s only company that goes across four different smart devices including TV, phone, car, and VR," Mr. Jia said in a webcast Tuesday. "Through this acquisition, LeEco has a solid foundation for its globalization strategy. We will add more global users to get to know the brand and our product experience."
Looking forward, LeEco may manage to get an edge as the biggest TV maker in the US. According to market research firm IHS Markit, Vizio has the second-biggest market share after Samsung Electronics in the country. In the first quarter of the year, Samsung sets made up 37.4% of the smart TV market in North America, followed by Vizio, which had 29.1% of market share, the firm said.
Last year, Vizio filed documents for an initial public offering to raise about $172.5 billion. In an interview to Bloomberg, Winston Cheng, the company’s senior vice president of global corporate finance and development, said that moving forward, in three to four years, the company intends to list the privately held LeEco in the US. Vizio has given the Chinese company a great platform to enter the US, having built a major business empire in the last 14 years in the country, he added.
According to the official statement, Vizio will continue to do business at its Irvine, California headquarters. Mr. Wang will become chairman and CEO of Inscape, Vizio’s data business, which will be spun off and operate as a separate private firm.