Troubled Chinese internet giant, LeEco, is switching hands. Sun Hongbin, board chairman of China’s leading real estate company, Sunac China, was elected as the chairman of the board of LeEco’s listed unit, Leshi Internet Information & Technology Corp on Friday afternoon, 15 days after LeEco’s founder, Jia Yueting, resigned as the board chairman on July 6.
In November 2016, Jia had sent an internal memo to his staff admitting that the tech giant was in a huge capital dilemma after expanding to too many sectors in too short of a time. Sun’s takeover was initiated after Sunac China’s January investment in LeEco, two months after LeEco’s financial crisis became public.
In January 2017, Sunac China announced a 8.61 percent buyout of LeEco’s listed unit shares, thus becoming the unit’s second largest shareholder. The company also bought 33.5 percent of LeEco’s TV business shares and 15 percent of its pictures business shares. The pricetag for the entire deal was RMB 15 billion (USD 2.22 billion).
After this capital injection into LeEco, Sun started to influence the company by optimizing its management structure and cutting back on spending.
After Jia’s resignation in May, Sun’s efforts allowed the head of LeEco TV branch, Liang Jun, to became CEO of LeEco’s listed company. LeEco’s smartphone business and its sports branch, LeSports, were significantly curtailed. The head of LeEco smartphone, Feng Xing, was forced to leave in May and several sports copyright purchase deals have been cancelled since Sun’s intervention.
Sun has also encouraged LeEco to improve its board structure, set up a management committee and assign financial managers to nearly all LeEco businesses. At Sunac China’s stockholders’ meeting in May, Sun said “We are going to improve the management system of LeEco and separate its publicly traded and private businesses. The listed unit should be in a closed loop, including its finance.”
Sun, 54 years old, was born in Shanxi province, also the former home of Jia. Sun established his first property agency in 1994 with the help of Lenovo founder, Liu Chuanzhi. He later founded Sunac China to develop commercial properties. According to its official website, the company’s total sales in 2016 reached RMB 155.31 billion (USD 22.89 billion), ranking seventh among all Chinese real estate enterprises.
So far, Sun has mostly taken control of LeEco’s best businesses, including its listed branch, TV business and pictures unit, while LeEco founder, Jia, is in America dedicating time to his car-making dream.
(Top photo from sohu.com)