On July 26th, US West Time, LeEcoGlobal held a global conference in Los Angeles. Jia Yueting announced that “LTV will wholly acquire the US’s second-largest TV manufacturer Vizio with US$2 billion.â€
Vizio is headquartered in Irvine, Southern California and was founded in 2002 by Wang Wei, a Taiwanese immigrant from China.
At present, LeTV’s acquisition of Vizio is still pending for regulatory review and is expected to be completed in six months. Both parties stated that after the acquisition, Vizio became a wholly-owned subsidiary of LeTV, but continued to maintain independent operations, including the original hardware, software business, technology research and development and intellectual property rights. However, the data business was split into an independent company, Inscape, and LeTV will hold a 49% stake in Inscape.
According to Zheng Xiaoming, Senior Vice President of Lectra Global Capital, the entity that made the acquisition was LeEco Global, a subsidiary of LeTV Holdings, which is in a parallel relationship with LeTV. Future LeEco Global will be listed in the United States. He also said that the acquisition will be completed in cash, funds from the inside. As the acquisition will increase LeTV’s asset-liability ratio, LeTV will conduct equity financing in the short term.
The acquisition was considered by the industry to be the largest acquisition plan in the history of the global television industry.
Under heavy losses, can internationalization go smoothly?
In 2012, LeTV started the super-TV strategy. LeTV.com established Levision New Electronic Technology (Tianjin) Co., Ltd. (hereinafter referred to as “Levision New Productâ€) to be responsible for LeTV's production in television.
According to statistics, LeTV was founded in 2013 when Foxconn held 20% of its shares through affiliates, but this affiliate company has been replaced by an affiliate company controlled by LeTV. Currently, LeTV.com holds a 58.55% stake in LeTV.
At the same time, according to related reports, LeTV made a loss of 47.34 million yuan in the first year of its establishment; in 2014, the loss amounted to 386 million yuan; by 2015, the amount of losses had been enlarged to 731 million yuan.
At the end of 2014, LeTV’s total assets and net assets were 1.831 billion yuan and 513 million yuan, and the corresponding liabilities were 1.318 billion yuan. By the end of 2015, LeTV’s new debt has reached 5.02 billion yuan, total assets of more than 4.818 billion yuan, and net assets have become negative.
In 2015, LeTV admitted for the first time to the investigation by the China Securities Regulatory Commission that LeTV made a new loss and caused the minority shareholders' profit and loss to decline. Of course Jia Yueting was given to the media in the United States.
The argument is that LeTV has never been a profit-oriented company. This answer may cause some disappointment to our shareholders.
In spite of the loss, LeTV invested 2 billion to buy Vizio. For rich and happy music, in order to gain international popularity, this should be a small amount, but in the case of a loss, it is unclear whether or not it is a bit "bold sensation."
The acquisition of Vizio, the largest TV manufacturer in the United States, was considered by the outside world as a milestone in the globalization of LeTV. "LeEco will make this acquisition more familiar to the United States and global users, and the global leader in large-screen ecology has been born."
What can Vizio bring for LeTV?
At the 2016 International Consumer Electronics Show CES, Le Shixing’s new president, Liang Jun, said: “The world is heading east. We are heading west. When international brands all went to China to compete, LeTV came to the United States.†Internationalized main battlefield.
Letv TV was launched online in the United States in December last year, and then continued to promote at low prices. LeTV is actively expanding its presence in the United States and has established offices in both Los Angeles and Silicon Valley.
In the acquisition, the two companies stated in the statement that, according to the terms of the transaction, Vizio's hardware and software business will become all owned subsidiaries of LeTV, and the data business Inscape will be spun off as an independent non-listed company. At the same time, Vizio management will continue to maintain its operations as an independent subsidiary.
According to data released by the market research company IHS Markit, Vizio controls the second largest share of the US TV and smart TV market. In the first quarter of this year, Vizio occupied 29.1% of the North American smart TV market, while Samsung’s share was 37.4%. Wang Wei claimed that Vizio's annual sales exceeded 3 billion US dollars.
Vizio has a rapid growth in the US market with a cost-effective advantage, mainly TV and audio products. According to data released by IHS Markit, Vizio sold 780 TVs in the United States last year. Vizio has also tried to expand its product line, but neither tablet computers nor smartphones or thin and light notebooks have achieved market success. Also, Vizio had sought a listing but ended in failure.
At the same time, Vizio's market is mainly located in the United States, with little brand awareness overseas. To enter the American Chinese circle, LeTV has the relative advantage of acquiring Vizio, but it would be a bit difficult to take this opportunity to expand more overseas markets. According to reports, LeTV needs revenue and needs a brand to expand its presence in the U.S. market, which Vizio can provide.
At present, LeTV’s acquisition of Vizio is still pending for regulatory review and is expected to be completed in six months. Both parties stated that after the acquisition, Vizio became a wholly-owned subsidiary of LeTV, but continued to maintain independent operations, including the original hardware, software business, technology research and development and intellectual property rights. However, the data business was split into an independent company, Inscape, and LeTV will hold a 49% stake in Inscape.
According to Zheng Xiaoming, Senior Vice President of Lectra Global Capital, the entity that made the acquisition was LeEco Global, a subsidiary of LeTV Holdings, which is in a parallel relationship with LeTV. Future LeEco Global will be listed in the United States. He also said that the acquisition will be completed in cash, funds from the inside. As the acquisition will increase LeTV’s asset-liability ratio, LeTV will conduct equity financing in the short term.
The acquisition was considered by the industry to be the largest acquisition plan in the history of the global television industry.
Under heavy losses, can internationalization go smoothly?
In 2012, LeTV started the super-TV strategy. LeTV.com established Levision New Electronic Technology (Tianjin) Co., Ltd. (hereinafter referred to as “Levision New Productâ€) to be responsible for LeTV's production in television.
According to statistics, LeTV was founded in 2013 when Foxconn held 20% of its shares through affiliates, but this affiliate company has been replaced by an affiliate company controlled by LeTV. Currently, LeTV.com holds a 58.55% stake in LeTV.
At the same time, according to related reports, LeTV made a loss of 47.34 million yuan in the first year of its establishment; in 2014, the loss amounted to 386 million yuan; by 2015, the amount of losses had been enlarged to 731 million yuan.
At the end of 2014, LeTV’s total assets and net assets were 1.831 billion yuan and 513 million yuan, and the corresponding liabilities were 1.318 billion yuan. By the end of 2015, LeTV’s new debt has reached 5.02 billion yuan, total assets of more than 4.818 billion yuan, and net assets have become negative.
In 2015, LeTV admitted for the first time to the investigation by the China Securities Regulatory Commission that LeTV made a new loss and caused the minority shareholders' profit and loss to decline. Of course Jia Yueting was given to the media in the United States.
The argument is that LeTV has never been a profit-oriented company. This answer may cause some disappointment to our shareholders.
In spite of the loss, LeTV invested 2 billion to buy Vizio. For rich and happy music, in order to gain international popularity, this should be a small amount, but in the case of a loss, it is unclear whether or not it is a bit "bold sensation."
The acquisition of Vizio, the largest TV manufacturer in the United States, was considered by the outside world as a milestone in the globalization of LeTV. "LeEco will make this acquisition more familiar to the United States and global users, and the global leader in large-screen ecology has been born."
What can Vizio bring for LeTV?
At the 2016 International Consumer Electronics Show CES, Le Shixing’s new president, Liang Jun, said: “The world is heading east. We are heading west. When international brands all went to China to compete, LeTV came to the United States.†Internationalized main battlefield.
Letv TV was launched online in the United States in December last year, and then continued to promote at low prices. LeTV is actively expanding its presence in the United States and has established offices in both Los Angeles and Silicon Valley.
In the acquisition, the two companies stated in the statement that, according to the terms of the transaction, Vizio's hardware and software business will become all owned subsidiaries of LeTV, and the data business Inscape will be spun off as an independent non-listed company. At the same time, Vizio management will continue to maintain its operations as an independent subsidiary.
According to data released by the market research company IHS Markit, Vizio controls the second largest share of the US TV and smart TV market. In the first quarter of this year, Vizio occupied 29.1% of the North American smart TV market, while Samsung’s share was 37.4%. Wang Wei claimed that Vizio's annual sales exceeded 3 billion US dollars.
Vizio has a rapid growth in the US market with a cost-effective advantage, mainly TV and audio products. According to data released by IHS Markit, Vizio sold 780 TVs in the United States last year. Vizio has also tried to expand its product line, but neither tablet computers nor smartphones or thin and light notebooks have achieved market success. Also, Vizio had sought a listing but ended in failure.
At the same time, Vizio's market is mainly located in the United States, with little brand awareness overseas. To enter the American Chinese circle, LeTV has the relative advantage of acquiring Vizio, but it would be a bit difficult to take this opportunity to expand more overseas markets. According to reports, LeTV needs revenue and needs a brand to expand its presence in the U.S. market, which Vizio can provide.