Beleaguered Le Eco, the Chinese tech and entertainment conglomerate that stretches from electric cars to movie-making, is reported to be having renewed difficulties closing its $2 billion deal to buy US TV maker Vizio. Media reports in China say that the deal may have to be abandoned or cancelled.
The reports point to China’s current restrictions on movement of capital from China to overseas. But they also point to Le Eco’s well-known cash crisis.
The deal to buy Vizio was announced in July, and was previously expected to close in the last quarter of 2016. In February, Le Eco said that it was still committed to the purchase, and called it a priority.
At the end of October, LeEco group publicly admitted that its acquisition and diversification splurge, had left it dangerously short of finances. Since then it has cut back spending and raised fresh finance. A 15% stake in film production and distribution company Le Vision Pictures was sold in January for $152 million (RMB1.05 billion.)
In recent weeks it has been reported that Le Eco is to sell a large plot of land in Silicon Valley where it had planned to build a car factory. The price tag for the 49 acre plot is reported to be $260 million with the buyer another Chinese firm, called Genzon.
Vizio makes smart TV sets, displays and speakers. Critics of the deal said it was a vanity project that was not strategic for LeEco’s development, and that LeEco would be better off if the deal collapsed.