Sometimes in the mercurial world of business acquisitions, things don't work out, and that's the case for Chinese firm LeEco and its proposed bid to buy US television giant Vizio for $2 billion.
The companies announced today they are calling off the deal, citing "regulatory headwinds." Chinese regulatory hurdles have been rumored to be standing in the acquisition's way.
LeEco, a multi-faceted tech company, has products in nearly every category, from phones to VR to smart bikes to cars as well as internet services. A Vizio deal would have allowed LeEco to continue its push into the US market, which it launched head first into last year.
But alongside LeEco's ambitions are reports it's struggling to stay afloat; the company is said to have a serious cash flow problem and reportedly delayed paying US employees late last month. Financial constraints apparently weren't cited as reasons for cancelling the Vizio acquisition, but LeEco's rumored struggles may have been a factor if not the factor in calling the whole thing off.
LeEco and Vizio aren't washing their hands of each other completely, however.
Though Vizio will no longer be brought under the LeEco umbrella, the companies are leaving open the possibility of serving up the Le app and content through Vizio products.
On the flip side, the new arrangement, described as "a win for both companies", will see Vizio devices go on sale in China thanks to LeEco's established in-roads there.
While it's not the ending either was probably hoping for, there are benefits to be had for both Vizio and LeEco. For its part, Vizio has a potentially clearer path to sell its products in a huge market, while LeEco can build name recognition stateside if its app and content are built into name-brand devices in the country.
If anything, Vizio is dodging ownership by a company with faltering financials, and that's a benefit it can take to the bank right now.
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