VIZIO on Monday filed a lawsuit against LeEco over the Chinese tech giant's failed acquisition of the U.S. TV manufacturer, as the Irvine, California-based company is now seeking a buyer termination fee amounting to $75 million. The litigation was filed with the United States District Court for the Central District of California, Southern Division, and is a messy end to a year-long merger saga that started last July. LeEco initially introduced the deal as a $2 billion consolidation effort that's meant to allow the company to quickly establish a foothold in the U.S. market while simultaneously expanding the availability of VIZIO-made TVs and related products. Since then, the Beijing, China-based consumer electronics manufacturer found itself in the middle of a massive cash crunch, with most industry watchers believing that the company expanded too quickly and ran out of resources to keep its everyday operations running.
The transaction was called off in March and that decision was publicized by both companies in April, though neither mentioned a buyer termination fee that VIZIO is now adamant to pursue. The U.S. firm stated that LeEco already paid approximately $40 million of the $100 million fee but apparently isn't keen on paying the full amount mandated by the clause, with VIZIO now looking for an additional $75 million. The TV manufacturer also claims that LeEco was already close to a financial collapse when it announced the acquisition last summer and was primarily interested in pursuing the deal in an effort to maintain a false image of stability and even access VIZIO's customer data and major clients. The Chinese conglomerate recently tried renegotiating the aforementioned buyer termination fee and reduce its obligations by 60 percent, prompting VIZIO to file a lawsuit against the company.
The TV maker is now accusing LeEco's top management of misleading its executives in regards to the financial health of its holding company and dealing in bad faith. Back in its home country, LeEco had $180 million in assets frozen by a Shanghai court just yesterday, with reports indicating that a significant number of its Chinese employees won't be paid until mid-August. It's currently unclear whether VIZIO will be able to successfully extract the rest of the buyer termination fee from LeEco but an update on the situation should follow later this year.