You are using an older browser version. Please use a supported version for the best MSN experience.

Vizio Files $75 Million Lawsuit Against LeEco for Busted Merger

Variety logo Variety 7/11/2017 Gene Maddaus
© Provided by Variety

Vizio filed a $75 million lawsuit against LeEco on Tuesday, alleging that the faltering Chinese electronics manufacturer never had the money to close a $2 billion deal.

LeEco announced the plan to acquire Vizio last July, as part of an ambitious effort to expand into North America. The deal was officially scrapped in April. At the time, both sides cited “regulatory headwinds” in China as the principal cause of the deal’s collapse.

However, in its lawsuit filed in U.S. District Court in Santa Ana, Calif., Vizio now contends that LeEco had already “begun to collapse due to their severe cash flow and financial problems” at the time the deal was announced last year. Vizio alleges that LeEco pursued the deal as part of a “secret plan” to create a false impression of financial health, and in an effort to obtain access to Vizio’s corporate clients and private customer information.

The lawsuit also alleges that LeEco has violated the terms of the acquisition agreement by failing to pay the full $100 million termination fee. Vizio has received just $40 million so far, the suit claims.

The suit contends that LeEco pursued the acquisition because it “desperately needed to either obtain the instant financial stability, credibility, and resources that a merger with Vizio would bring, or at least to create a widespread and dramatic public impression of their own financial health and well-being to grow or continue in business that would come with the announcement of such an intended merger.”

LeEco is under growing financial strain, with a court in China recently freezing some of its assets in a dispute with creditors, according to Reuters.

Following the breakup of the deal in April, LeEco and Vizio announced that they would pursue a joint venture whereby LeEco would distribute Vizio products in China, and Vizio would make LeEco apps available on its platform. That deal now appears to be dead, as Vizio says its efforts to make good on the arrangement “were met with practical radio silence.” Vizio now accuses LeEco of using the joint venture as an elaborate subterfuge to avoid paying the full $100 million termination fee.

Vizio may find it difficult to collect any judgment against LeEco, which is headquartered in Beijing. So Vizio has filed a separate $50 million claim in Orange County Superior Court against Le Technology, a California subsidiary of LeEco. The state court complaint repeats the claims in the federal suit nearly verbatim.

Subscribe to Variety Newsletters and Email Alerts!

AdChoices
AdChoices

More from Variety

AdChoices
image beaconimage beaconimage beacon