Vizio files $110M lawsuit against LeEco over failed merger

US television maker Vizio is suing Chinese electronics company LeEco alleging that LeEco made false financial statements and claims in the run up to its proposed $2 billion acquisition, which ultimately collapsed in April. Apparently, the deal included a $100 million buyer-termination fee, out of which only $40 million has been handed over so far and now Vizio has filed suit in a California court to collect the remaining payment.

LeEco announced its acquisition plans last July, as part of an ambitious effort to expand to North America. The deal, however, couldn't see through. At the time, both LeEco and Vizio cited “regulatory headwinds” in China as the principal cause of the deal’s collapse. But now, US television maker 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. According to Vizio, LeEco not only failed to fully cover the $100 million buyer-termination fee that was written into the deal, it didn’t even follow on a joint-venture agreement the companies struck after the failed merger.

Following the collapse of the deal in April, LeEco and Vizio announced a joint venture agreement whereby LeEco would distribute Vizio products in China, and Vizio would make LeEco apps available on its platform. That deal too was an eye-wash, 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.

While suing a Beijing-based company in federal court might not reap in much, so in a second lawsuit seeking $50 million, Vizio instead targets one of LeEco’s subsidiaries, Le Technology, which operates out of California. Recently, a Shanghai court froze $180 million in assets belonging to the LeEco founder and former CEO, his wife and three LeEco affiliates.