There are more problems for ambitious Chinese tech firm LeEco. Its acquisition of U.S.-based TV maker Vizio, a surprise deal announced last summer, has run into issues, according to media reports in China.
Back in February, LeEco brushed off concerns around the deal after Vizio settled an FTC charge for surreptitiously collecting customer viewing data; this time the issue seems financial. More specifically, the $2 billion deal — announced last July — has “stalled” due to domestic restrictions on the transfer of capital overseas from China, so says a report from Caixin (via Variety.)
“So far the deal is still pending regulatory approval,” was all a spokesperson from LeEco would say when we contacted the company for comment.
LeEco started out offering a Netflix-like service in China, before expanding into consumer electronics with smart TVs, smartphones and an audacious effort to rival Tesla with an electric car developed alongside U.S.-based Faraday Future. However, those ambitions were checked last November when billionaire CEO Yueting Jia told employees that the company’s rapid growth was leading to stagnation and management problems. He proposed to reduce non-essential spending outside of China, and drop his own salary to just $0.15.
LeEco raised much-needed capital in January when it sold a 15 percent stake in its film distribution firm for around $150 million, and it pulled in $600 million as recently as November. Yet despite that capitalization, there have been challenges. The firm slashed its headcount in India (a move it claims was planned), while it is also rumored to be selling the Silicon Valley-based real estate it bought from Yahoo last summer.
Its partnership with Faraday Future has run into multiple roadblocks, too. The smart car project was designed to rival Tesla, but has experienced financial issues while LeEco bizarrely unveiled its own car to rival the project which, reports suggest, was unwittingly designed by Faraday Future.