Chinese electronics giant LeEco announced in July 2016 that it would be purchasing budget television maker Vizio for a cool $2 billion. This past April, the two sides pulled out of the deal citing “regulatory headwinds.”
Given LeEco’s recent financial troubles, word of the acquisition’s failure wasn’t all that surprising.
The disbanding appeared amicable as the two said they’d still work together to bring select Vizio products to the Chinese market. LeEco’s Le app was also to be included in some Vizio products.
Given the latest development, however, one has to think that things aren’t as friendly as they once were.
Vizio has filed a lawsuit against LeEco in California in which it claims that executives knew all along that LeEco wouldn’t have the money to complete the $2 billion acquisition. Instead, Vizio alleges that LeEco agreed to the buyout in order to create the public illusion that it was financially healthy.
The TV maker further alleges that LeEco accessed confidential customer information for its own personal use.
Vizio also notes that the original agreement called for a $100 million buyer termination fee that was to be paid to Vizio if the deal faltered. According to Vizio, they’ve only received $40 million thus far. The company also believes that the aforementioned distribution agreement put in place after the acquisition fell apart appears to have been done simply to avoid having to pay the full $100 million termination fee.
LeEco is headquartered in Beijing which means getting any sort of judgment could be tough. As such, Vizio also filed a nearly identical suit against Le Technology, a LeEco subsidiary, based in California.
Lead image via Jeff Lewis, AP