Chinese tech giant LeEco to acquire Vizio for $2 billion

China's LeEco plans to acquire Vizio for $2 billion—a move that will create a global television powerhouse and help cement the tech giant's presence in the world's largest economy.

Tuesday's deal will "lay a great foundation for LeEcco in the U.S. and global market," LeEco founder and CEO Jia Yueting told CNBC's "Power Lunch" on Tuesday, in an interview that was translated from Chinese.

Tuesday's news was the latest indicator of LeEco's forceful expansion into the U.S.

LeEco Global Holdings Ltd Founder, Chairman, CEO Yueting Jia.
Michael Newberg | CNBC
LeEco Global Holdings Ltd Founder, Chairman, CEO Yueting Jia.

Last month, LeEco poached a senior legal counsel from Google and purchased Yahoo's Silicon Valley property following its April unveiling of an 80,000-square-foot production factory in San Jose. LeEco is also due to launch its smartphones in the U.S. later this year, according to media reports.

Jia said he plans to fund international expansion through a combination of equity financing and cash flow from the firm's seven sub-ecosystems.

Previously known as LeTV, the company has gone from being primarily a video streaming service—it's well-known as the Netflix of China—to a diversified conglomerate with a product range that includes smartphones, televisions, mountain bikes and, most recently, electric vehicles.

Under the terms of the deal, Vizio's hardware and software businesses will be owned and operated as a wholly owned subsidiary of LeEco, while the Vizio's data business, Inscape, will spin out, the companies said in a statement. The deal is expected to close during the fourth quarter of 2016, the companies said.

Privately-held Vizio is one of North America's leading consumer electronics brands, known especially for its line of smart TVs. "I'm excited to see how LeEco's global reach and resources will elevate Vizio," William Wang, founder and CEO of Vizio, said in a statement.

Analyst reaction to the $2 billion price tag was mixed.

Bob O'Donnell, founder and chief analyst of TECHnalysis Research, called the figure "high" and reflective of just how important U.S. expansion was for LeEcho.

On the other hand, Bradley Gastwirth, CEO of equity research firm ABR Investment Strategy, believed the price was fair, noting that the deal also offered LeEcho access to Vizio's data business, Inscape. "Inscape will still be owned 51 percent by William Wang, with the remaining 49 percent by LeEcho," Gastwirth said.

Jia, who in the past has criticized Apple for its lack of innovation, said on Tuesday that he believes Chinese and U.S. companies can become "very good friends."

His comments come amid a wave of controversy regarding China Inc's expanding presence in the U.S.

Chinese investment in the U.S. rose to a record high last year as companies embarked on an aggressive shopping spree amid a worrisome domestic backdrop of volatile stocks, a depreciating renminbi and a marked economic slowdown.

"Like we always say, LeEco looks like an enemy to all, but actually we are the best ecosystem partner for everyone," Jia said.

He wishes to cooperate with U.S. tech rivals such as Amazon and Netflix, noting that "they can all become very good friends."

"In the U.S. our model is an open content ecosystem, so we want to open our cloud platform, e-commerce platform, big data platform, software, and hardware to our partners, so there is good opportunity for us to cooperate..."

For U.S. consumers, this acquisition should bolster the visibility of LeEcho's brand name seeing the Chinese conglomerate remains unknown to many Americans, commented Gastwirth.

—CNBC's Lauren Thomas and Haze Fan contributed to this report.