Vizio has filed two lawsuits against troubled Chinese electronics company LeEco over an attempted merger between the two companies that unraveled and eventually collapsed earlier this year. The US TV maker alleges that even at the time of the deal’s announcement, LeEco had already “begun to collapse due to their severe cash flow and financial problems.” LeEco’s money woes have been a running story for months, and Vizio’s sharply worded complaint says that the whole acquisition was a front for LeEco to create a positive impression of its financial standing. That directly contradicts what both companies said in April, when they jointly cited “regulatory headwinds” as the primary factor in the merger’s failure.
Vizio’s primary federal complaint seeks $60 million in damages in addition to punitive damages. The lawsuit says that during negotiations both in Beijing and Irvine, California (where Vizio is based), LeEco executives fraudulently claimed the company was financially healthy — all the while knowing there was no way LeEco would actually be able to make good on the $2 billion transaction.
Vizio says LeEco failed to disclose its huge money problems during merger negotiations
But LeEco, Vizio claims, “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 also wanted Vizio’s
Vizio accuses LeEco of failing to fully cover the $100 million buyers termination fee that was written into the deal; only $40 million has been handed over so far. Vizio also claims that LeEco accessed “confidential customer information” after the merger was announced and used that data “strictly for its own purposes.”