At a press conference in Los Angeles this morning, LeEco announced that it was acquiring the entirety of Vizio's hardware and software businesses for $2 billion. The acquisition, or at least an investment, had been rumored recently, but today it's official. Vizio will operate as a wholly-owned subsidiary of LeEco, meaning we can expect the Vizio brand to live on in the future, especially here in the US where Vizio is based.
Vizio's current executive management will remain in place at the company, which will continue to operate via its headquarters in Irvine, CA. Vizio's data business, Inscape, will be spun off as part of the acquisition, to become a separately, private-owned firm, run by Vizio's founder and CEO William Wong (LeEco will own a 49% stake in this business, with Wong owning 51%).
LeEco expects the transaction to close some time in the fourth quarter of this year. The acquisition gives LeEco a sudden and large presence in North America, where Vizio is exceptionally popular, well-known for its highly affordable but capable TVs and audio systems. What remains to be seen is if Vizio devices will continue running Vizio software, or if future releases will see the company's televisions transition to LeEco's proprietary TV operating system. Per the press conference, it appears Vizio's TVs will be running LeEco's TV operating system going forward, though when the first products with that software will launch is unknown.
Also unknown is what this means for LeEco's brand in the US - will LeEco smartphones, for example, be released in America under the Vizio brand? Or will Vizio simply be the TV and audio arm of LeEco, with the company's other products maintaining their corporate branding when and if they're released in the US? Given LeEco has never actually launched any products of consequence in the US, we don't really have any history to go on. But, for now, one thing seems clear: LeEco is definitely interested in the US market, though the extent of its aspirations remains unclear.
PRESS RELEASE
Pioneering Internet Ecosystem Company LeEco Acquires VIZIO for $2B
Disruptive, first-of-its kind ecosystem model delivers new value for U.S. consumers
San Jose, CA and Irvine, CA — July 26, 2016 — LeEco and VIZIO, Inc. announced today a definitive agreement under which LeEco would acquire VIZIO, Inc. for $2 billion USD. The VIZIO hardware and software businesses will be owned and operated as a wholly owned subsidiary of LeEco, while the VIZIO data business, Inscape, will spin out and operate as a separate, privately owned company.
Recently named one of Fast Company’s 2016 “Most Innovative Companies,” LeEco is a leading global company that provides breakthrough experiences through an open, integrated ecosystem enabled by its Internet and cloud platform. LeEco develops intelligent hardware that serves as the interface to connect individuals, interact with them and to enrich their lives through premium content and applications.
“LeEco believes in breakthrough technologies, a complete ecosystem and disruptive pricing. Acquiring VIZIO is an important step in our globalization strategy and building our North American presence,” said YT Jia, Founder, Chairman and Chief Executive Officer, LeEco. “From its inception, VIZIO introduced a disruptive business model that changed the industry and aligns with our vision of breaking boundaries to deliver consumer-focused products, software and services.”
Based in Irvine, CA and founded in 2002, VIZIO is a leading consumer electronics brand in North America, with #1 unit share in Smart TVs1 and #1 unit share in Sound Bars2. The company is focused on delivering the ultimate home entertainment experience through its ecosystem of hardware, software and services. The acquisition benefits both companies with VIZIO offering LeEco a steady install base of users and a brand that is both popular and successfully distributed throughout major North American retail channels. LeEco provides VIZIO immediate global scale to bring its innovations to consumers worldwide. Like LeEco, VIZIO shares a similar vision of creating premium products with the latest innovations and making them accessible for everyone – from budget-minded students to custom home theater cinephiles – without sacrificing quality or performance.
“Fourteen years ago, I mortgaged my house to start VIZIO and since then, it has grown into one of the most well-known and respected CE brands in North America. As an entrepreneur, I couldn’t be more proud of what has been accomplished,” said William Wang, Founder, Chairman and Chief Executive Officer, VIZIO. “As we enter a new chapter with LeEco, I’m humbled by the hard work and dedication of VIZIO shareholders and employees. Their unwavering faith in the brand and commitment to excellence is what made this venture possible. I’m excited to see how LeEco’s global reach and resources will elevate VIZIO as we continue to bring great technology, innovation and value to our consumers.”
The VIZIO executive management team will remain in place and will continue its operations as an independent subsidiary from its existing headquarters in Irvine, CA. The VIZIO brand and its portfolio of products will continue to be sold through its existing distribution channels and supported by the same North American-based, award-winning customer service. William Wang will transition to Chairman and Chief Executive Officer of Inscape, with focus on the continued expansion and growth of the brand’s data business.
As part of the definitive agreement, LeEco will acquire all of the VIZIO hardware and software operations, technology and intellectual property. The transaction is expected to close during the fourth quarter of 2016, and is subject to customary closing conditions. BofA Merrill Lynch acted as advisor to the special committee of the VIZIO board of directors, and Latham & Watkins LLP served as legal counsel for VIZIO on this transaction.
