LeEco and VIZIO have called off their planned merger because of “regulatory headwinds,” the two companies said in a joint statement provided to Android Headlines. The deal that’s been in the making for close to a year was supposed to have LeEco acquire VIZIO for $2 billion in an effort to expand its presence in the United States, but that idea has now been dropped due to issues that neither company has yet clarified. LeEco and VIZIO said they still believe the two firms are compatible, but as any kind of merger is seemingly not possible at this point in time, they’ve opted to find a solution that they describe as “a win” for both parties. For the time being, VIZIO will continue to integrate the Le app and related content into its CE platform, in addition to collaborating with the Chinese tech giant in an effort to implement its Ecosystem User Interface (EUI) into its future offerings, thus providing users with a wide variety of exclusive content and giving VIZIO-made products a foothold in China.
The new partnership between LeEco and VIZIO that’s meant to replace their ambitions to merge for the foreseeable future is unlikely to have the same financial impact that LeEco was hoping the actual merger will. The Beijing-based company was initially planning to acquire VIZIO in an effort to stabilize some of its revenue flow and have more resources to reinvest into its riskier endeavors like driverless cars. The cancellation of the deal might be partially connected to VIZIO’s legal troubles that arose after the U.S. Federal Trade Commission (FTC) found the Irvine, California-based firm guilty of collecting data from 11 million American households without user consent. While LeEco reiterated its commitment to the deal following a 2.2 million fine VIZIO received in February due to the ordeal, U.S. regulators might not have been willing to approve a deal that would see a major Chinese tech conglomerate acquire a company found guilty of spying on millions of American citizens just months prior to the transaction.
Other than VIZIO’s own controversies, LeEco itself may have been reluctant to go through with the deal that most industry watchers agreed was overpriced due to the fact that the Chinese company is currently enduring a cash crunch and has to rely on financial injections to keep its many existing businesses afloat.