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China's LeEco Buys Vizio For $2 Billion, Edging Closer To Penetrating US Market

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LeEco, the Chinese electronics firm, has announced that it purchased Vizio, the American TV manufacturer, for no less than $2 billion.

The announcement took place during a press event in Los Angeles. The acquisition virtually transforms LeEco into one of the major players in the U.S. television sector.

According to the deal, Vizio will act as a subsidiary with full independence and will keep almost all of the current executive team. The notable name that parts ways with the company is Vizio's CEO and founder, William Wang.

Wang is leaving to be in charge of Inscape, Vizio's data business. Inscape will spring out of Vizio and become a privately held company, of which Wang will own 51 percent. The remaining 49 percent will be in LeEco's hands.

During the Los Angeles press event, Wang was reminiscent of the company's beginnings and told the audience about the challenges that he and Vizio navigated in order to succeed.

Wang confessed to having "mixed feelings" with regard to selling Vizio. He explained that as the founder of the company, it is difficult to let it go, but as its CEO and owner, he acknowledges that this is the best route for both employees and shareholders.

Many American techies might not be accustomed to the brand LeEco, but they should know that the company dabbles into more or less all areas of the consumer electronics sphere. LeEco got involved with smartphones, electric cars and Android-powered bicycles.

LeEco CEO Jia Yueting made the headlines when he criticized Apple and labeled the tech company "outdated" earlier this year. As a side note, Yueting's company made use of Nazi imagery when it showcased its smartphone to the market, so his PR skills might need a bit of polishing.

Vizio, meanwhile, is a classic American success story. In 2012, 415 out of the company's 417 employees were working in the United States, and the perseverance of the enterprise turned it into a relevant player in the television space. The company was not immaculate, however. In 2015, Vizio was criticized when it was revealed that the company was collecting viewer habits data from its smart televisions and using them in its Inscape business.

Part of the deal between LeEco and Vizio is that the latter will keep licensing Inscape technology for 10 years to support television manufacturing. What is more, every Vizio distribution agreement remains live, which grants LeEco easy access into the U.S. market.

At the event, LeEco noted that the purchase turns it into the "largest internet TV [global] access point."

LeEco's LeTV is mostly known as the Chinese Netflix, as the company has under its belt the distribution rights for sporting events such as the English Premier League, Major League Baseball, not to mention top-flight movies.

The enterprise appeals to its clients via low-priced TVs and handsets, and it gets its revenue stream from charging for video content. Le Vision Pictures is the company's content creating arm, which delivers about 10 to 5 Chinese-language films per annum, and the company also works to release English-language films.

It is anyone's guess what the deal will mean for LeEco's brand in the United States, but the company's interest in the American market is strong and might yield interesting results.

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