LeTV's $2 billion acquisition of US TV maker VIZIO is about to launch Series A financing

On July 27, at 2 a.m. Beijing time today, LeTV announced in Los Angeles, USA that it would acquire U.S. TV manufacturer VIZIO for US$2 billion. Since the acquisition requires U.S. approval, the transaction is expected to be completed within 6 months.

Original title: LeEco buys U.S. TV maker VIZIO for US$2 billion

. July 27 News, at 2 a.m. Beijing time today, LeEco announced in Los Angeles, USA to acquire U.S. TV maker VIZIO for US$2 billion. Due to the acquisition, the transaction is expected to be completed within 6 months.

Winston Cheng, senior vice president of LeEco Global Capital, revealed that LeEco plans to acquire VIZIO and its subsidiary Inscape, of which Inscape has advantages in smart TV big data. After the acquisition is completed, LeEco will own 100% of VIZIO and 49% of Insacape. At the same time, the acquisition will be completed in cash, with the funds mainly coming from other LeEco's internal business segments and banks.

LeEco's acquisition of VIZIO's site architecture chart

is LeEco's overseas entity and a company that plans to go public in the United States in the future. According to LeEco, US$2 billion is 100% cash. This acquisition is similar to LBO. The main source of funds comes from LeEco's internal and banks. Part of the 2 billion yuan will be used for a three-year incentive plan for the team. At the same time, LeTV revealed that after the acquisition was completed, the company would soon launch Series A financing, and part of the funds raised would be used to repay the loans used in this acquisition.

Just before, LeEco posted four posters internally, showing that LeEco would hold a press conference in Los Angeles. The specific matters were related to LeEco's global business. This press conference finally clarified various rumors about LeTV.

Founded in 2003 and headquartered in Irvine, California, USA, VIZIO is the largest smart TV manufacturer in the United States. William Wang, founder and CEO of VIZIO and Chinese-American entrepreneur, said at the press conference that VIZIO currently has annual revenue of more than US$3 billion and has made profits every year for the past ten years.

VIZIO's success in the market is mainly due to its "core product positioning of providing luxury goods that are affordable to the general public." It is said that in terms of brand promotion and marketing, Vizio has always adhered to its unique business model, which relies almost entirely on store display and word-of-mouth marketing, only using products to shape the company's brand, minimize marketing costs, and form a competitive advantage in product prices. It was in 2007, five years after the company was born, that Vizio started running some advertising, and its budget accounted for less than 1% of the company's total expenses.

Vizio once ranked first in the North American TV market share, side by side with Samsung in the North American TV market. Data shows that in 2015, Vizio had an 18% LCD TV market share in North America, and its 2014 market share was 16.5%. In the first quarter of 2016, the company gained a market share of as high as 21.3%.

But compared with highly qualified Korean manufacturers, Vizio's disadvantages lie in its limited production capacity, limited financial resources and limited resources. This may be one of the reasons why Wang Wei's team finally chose to sell it to LeTV.

Wang Wei mentioned at the press conference that he first met with Jia Yueting, founder, chairman and CEO of LeEco Holdings Group, in Beijing more than three years ago. Since then, he has rejected Jia Yueting's acquisition requests several times. When Jia Yueting mentioned this matter, he said: "I put forward the idea of a merger, but I was rejected time and time again. I was very depressed. After three years of hard pursuit, the iceberg finally melted."

In the future, LeEco will establish dual headquarters in China and the United States. By then, VIZIO will provide 8 million Internet TVs and channels for LeEco's large system, and LeEco will support VIZIO with content, cloud services, etc. It is said that in the first half of 2016, the total revenue of the two exceeded US$4 billion. Add up the two companies, and the two companies already have 28 million Internet TVs on the market.

Mattew McRae, chief technology officer of VIZIO, said that LeTV has rich experience in cross-device applications of sports, movies and other content and has created new opportunities. China and the United States are the two largest markets for Internet, content, and smart device consumption in the world. The combination of LeTV and VIZIO will be a great thing.

Jia Yueting believes: "Le Shi will not only bring LeEco+VIZIO to American users, but will also bring the Internet ecological model to the United States and create a freely flowing ecological life for American users." In two months, the LeEco ecosystem will officially land in the United States and appear in Silicon Valley.

Yien.com compiled and released it based on reports from Yiou.com and Huxi.com

Editor: Nancy