China-based LeEco has terminated its planned acquisition for $2 billion of Vizio the U.S. based consumer electronics business due to issues with regulators, the latest setback to the expansion drive of the Chinese conglomerate that has been strapped for cash.
The deal was announced first during July of 2016 as LeEco agreed to acquire Vizio, the maker of flat panel television based in Irvine, California.
A representative from LeEco cited a policy factor in China for abandoning its proposal, but did not give any further details.
The company is one of the most ambitious businesses in China that grew from a video website similar to Netflix into a huge business empire that spans cars to consumer electronics all over the past 13 years.
However, of late it has struggled to meet the ambitions it has that include taking on Tesla Motors in the making of top of the line electric vehicles.
Over the past few months, LeEco has had financial problems which chairman and founder Jia Yueting attributed to its rapid pace of expansion, calling it large company disease.
LeEco is trying to sell a property in Silicon Valley in the U.S. that is 49 acres in size for $260 million, less than one year after it purchased it from Yahoo. LeEco will use the proceeds to help increase liquidity.
It comes after an investment of $2.2 billion secured during March through backers that included Sunac China Holdings a property developer to finance its Internet entertainment and TV business.
China has increased its scrutiny of deals outside the country the last few months as it attempts to limit outflows of capital and to stabilize its yuan.
In March, the China company Dalian Wanda Group’s deal of $1 billion to acquire Dick Clark Productions in Hollywood was scrapped, a deal the media said fell apart because of the scrutiny by Beijing on deals outside China.
A new deal between Vizio and LeEco will replaces the previous deal, in which the two companies will incorporate an app and content of LeEco within the platform of Vizio, and bring products of Vizio in the market in China, said LeEco Tuesday.
Some observers have welcomed LeEco’s withdrawal of its plan to acquire Vizio, saying it was a good decision for LeEco, which has owed money to suppliers and recently had a contract for sports broadcasting terminated due to not paying an installment.
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