Chinese technology company LeEco quickly made a name for itself as it took big and bold steps to establish a position in the market. It went so far as to create an autonomous all-electric car. Things have been going from bad to worse for the company over the past few months. It even had to abandon its proposed acquisition to TV-manufacturer Vizio. It’s going to cost LeEco, though, as Vizio has now sued LeEco for $100 million over the failed acquisition.
It has been over a year since LeEco announced its intention to acquire Vizio for $2 billion. The announcement was made not too long after LeEco announced its arrival in the United States with much pomp and circumstance. The acquisition would have given it a fighting position in the country’s TV market.
However, following rumors that it was getting difficult for the company to follow through, LeEco announced a couple of months ago that it was backing out of this deal due to “regulatory headwinds.” The consensus remains, though, that the company gave up on the acquisition due to its ongoing financial problems.
The agreement that the companies once reached had a $100 million buyer termination clause which mandated that LeEco pay the amount if it decided to back out of the deal. Vizio claims that LeEco isn’t paying the full amount and is offering a joint distribution deal instead.
As part of the deal, the company would pay $40 million upfront and $10 million after the new deal is signed. It wants the remaining $50 million to be used as the funding for a new joint venture.
Vizio also claims in the lawsuit that LeEco lied to them about its financials and that the true intention behind the merger was to access Vizio’s corporate customer database to gain valuable information.