July 12, 2017 9:49:20 am
Vizio Inc. sued LeEco Inc. in the wake of the Chinese technology conglomerate’s failed attempt at a $2 billion acquisition of the US television maker. Vizio seeks $60 million in damages, claiming LeEco paid only $40 million of a $100 million termination fee and didn’t live up to its end of a joint-venture agreement the companies struck after the failed merger.
After the merger fell through in April, the companies agreed to set up a venture to sell Vizio’s products in China through LeEco’s distribution, according to the Irvine, California-based company’s complaint filed in nearby Santa Ana federal court. Vizio renounced immediate payment of the termination fee on the condition it would receive $40 million initially, plus $10 million at a later point, and Beijing-based LeEco would invest $50 million in their joint venture, according to the complaint.
When Vizio tried to work out further terms of the framework agreement, it was met with “radio silence,” the company said. LeEco used the proposed joint venture as a subterfuge to escape the $100 million liability, according to Vizio. Representatives of LeEco didn’t immediately respond to a request for comment on the lawsuit.
LeEco, the holding group for businesses controlled by billionaire Jia Yueting that span electric cars and media to smartphones and TVs, had announced the agreement to acquire Vizio last July. The deal was intended to create a foundation for branding and acquiring US customers. The companies said in April the acquisition wouldn’t proceed due to “regulatory headwinds.”
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