(Yicai Global) Aug. 21 -- As Sun Hongbin, Leshi Internet Information and Technology Corp.'s [SHE:300104] new chairman, carries out restructuring, the firm has responded to rumors that Tencent Holdings Ltd. [HK:0700], Alibaba Group Holding Ltd. [NYSE:BABA], JD.com Inc. [NASDAQ:JD], Dalian Wanda Group Co. and Legend Holdings Corp. [HK:3396] have expressed interest in acquiring its assets.
The rumors gained momentum after LeEco's new mid-level and senior managers attended a closed-door meeting.
"Some internet giants have indeed sent people to talk with LeEco's senior management about business cooperation, but it's unclear if any deal has been concluded," Chinese newspaper Securities Daily quoted a source at the company as saying yesterday. "Only Sun Hongbin can make decisions on such deals. The firm may consider introducing strategic investors."
Sun has been trying to revive the company through a transformation ever since he took over. Whether bringing on any of the rumored backers will further dilute Sun's shares is uncertain.
Sunac China Holdings Ltd. staff have taken seats on Leshi Internet Information and Technology's board of directors, and Leshi Internet General Manager Liang Jun has replaced LeEco founder Jia Yueting as the public company's legal representative following major senior management reshuffles.
JD.com founder Liu Qiangdong proposed an acquisition of LeEco's TV manufacturing business to Sun after Jia resigned, an informed source said. Tencent has expressed an interest in Le Vision Pictures, and Alibaba is eyeing LeEco's assets, the source said.
Tencent, Alibaba and JD.com declined to comment on the rumors.
Sun pledged all of his shares after being chairman for less than a month, and reportedly may give the company a new logo and name. Rumors abounded that the Tianjin-headquartered real estate developer might be short on cash after several major acquisitions that cost hundreds of billions of yuan.
"LeEco's new strategy entails substantial financial inputs, and the restructured company also requires new investment," said Shen Meng, managing director at Chanson & Co. "So Sun Hongbin needs to introduce new investors."
"The fact that the tech giants have shown interests in the new LeEco's assets doesn't necessarily mean that they can come through with a deal," Shen said. "It ultimately depends on asset prices. LeEco has not depleted its resources. Its brand value has diminished, but still remains attractive. Sun Hongbin will definitely insist on recovering the premium price that he paid for the LeEco brand, so he'll be extra cautious if he decides to introduce new investors or sell the assets."
During the closed-door meeting, the new management identified the big-screen TV business as the top priority for LeEco going forward and adjusted strategies and positioning for other core businesses including Le Vision Pictures and Leshi Video.
LeEco will become an online home entertainment business, Liang once said. Tencent and Alibaba are the biggest players in this field, and they are on Sun's shortlist for potential strategic investment deals.