TCL and Letv Announce Strategic Cooperation
- The two firms aim to transform the sector while building leading positions in the global TV market
SHENZHEN, China, Dec. 17, 2015 /PRNewswire/ -- TCL Multimedia and Letv announced jointly that Letv has subscribed to an approximate 20 percent stake in TCL Multimedia through Letv Zhixin's newly-established wholly-owned subsidiary in Hong Kong. Upon completion of the deal, Letv will become the second largest shareholder of TCL Multimedia.
Under the terms of the share subscription agreement, Letv, through the Hong Kong subsidiary, invested HK$2.268 billion (approx. US$293 million) to subscribe to 349 million new shares of TCL Multimedia at HK$6.5 per share. Once the deal closes, Letv will nominate two directors at TCL Multimedia.
Hong Kong-listed TCL Multimedia, a major component of TCL Corporation and one of China's leading TV makers and distributors, sells over 1 million TV sets monthly on average. Letv Zhixin, a subsidiary of Letv, is primarily engaged in the sale of smart terminals, including Internet super TVs and set-top boxes.
When commenting on the cooperation, TCL said in the announcement that Letv's subscription to shares in TCL Multimedia will create a comprehensive and deeper cooperation in strategic resources and business models, leading the world to embrace the era of smart TV-centered living rooms.
Letv is an emerging and powerful brand in the Chinese internet market. The company has one of the largest online content libraries, as well as a series of resources creating an entire digital entertainment ecosystem in addition to strong capabilities in collaboratively developing hardware and software applications. The company has created products for the online content, mobile phone, sports, internet finance and automotive markets as part of building a closed vertical ecosystem that combines platform, content, terminal and applications.
TCL Corporation is the only integrated company engaged in every aspect of China's smart TV industry chain including screens, chips and smart terminals and the developer of the country's first Android smart internet TV. The company has established a global presence with strong capabilities in supply chain control, longstanding strength in software and hardware development, a large pool of patents as well as a well-established global offline marketing and service system.
According to the agreement, Letv will provide TCL Multimedia with access to its quality content, cloud platform, e-commerce and big data, among other resources, while TCL Multimedia will provide Letv with its world-leading supply chain control, access to its industrial manufacturing and design facilities as well as its software and hardware R&D platform and offline service system. At the same time, the two companies will also cooperate on product development, design and innovation, user operations and overseas expansion.
TCL Corporation Chairman and CEO Li Dongsheng said, "The partnership with Letv is an important step in TCL Multimedia's transition to the internet. We look forward to creating a win-win situation by combining Letv's strength and ability in smart TV applications and services including products and business models with TCL Multimedia's leadership position in the TV industry."
In addition to being complementary to each other, the two Chinese companies will endeavor to surpass traditional TV manufacturers in South Korea, Japan, Europe and the US in a new round of competition in the internet smart TV market through resource consolidation, with the expectation of being able to gain a true competitive edge. So far, TCL ranks third with its global TV shipments reaching an annual 17 million units. Letv's SuperTV sales volume is expected to double to 3 million units this year.
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