Deals and IPOs

Chinese tech firm LeEco’s $2 billion acquisition of Vizio stalled

LeEco hits another stumbling block
LeEco hits another stumbling block

Chinese tech firm LeEco's $2 billion acquisition of Vizio is delayed, according to local media reports.

The deal with Vizio, a major television maker based in the U.S., was first announced last July, and would have turned LeEco into one of the world's biggest suppliers of TVs.

Beijing-based LeEco, which dabbles in everything from movies to cars, has had a dizzying journey to the top. But its fast rise is now faltering, and the stalled Vizio deal is the latest crack to appear, marking yet another botched foreign acquisition as the Chinese government has tightened capital controls.

LeEco had been busy expanding rapidly, launching its smartphones in India, developing a smartbike, and even opening a pop-up store in Los Angeles. But the company's woes have been slowly building.

David Paul Morris | Bloomberg | Getty Images

At one point last year, the company was so cash-strapped that its CEO, Jia Yueting, said he would cut his own salary to 15 cents. And adding to the challenges are increased capital controls from the Chinese government after overseas deals hit a record $226.5 billion last year, according to Dealogic.

The buying frenzy meant money was flying out of China, weakening an already depreciating yuan. To counterbalance, China turned to its foreign exchange reserves to buy back yuan. But the move wasn't enough, and late last year, the government increased regulatory scrutiny on specific overseas transactions.

Since then, plenty of deals have been killed, with more on the rocks, such as Chinese conglomerate Dalian Wanda's $1 billion bid to buy Golden Globes-operator Dick Clark Productions.

Experts have said they expect foreign acquisitions from China to be on the wane all year because of the stepped-up capital controls.

LeEco first started with a Netflix-style streaming video service online before later developing a variety of gadgets, including an electric car meant to take on Tesla. Shares of its listed unit, Leshi Internet Information and Tech Corp, have dropped around 7 percent this month.

Spokespeople at LeEco and Vizio didn't immediately respond to a request for comment.