Vizio is Suing LeEco for $100 Million After Failed Acquisition
LeEco’s storied financial issues are pretty well known these days. The company has been one of the few Chinese smartphone OEMs to expand into the United States market, and boy did they have some ambitious plans. They opened up a new HQ in California, purchased some land from a dying Yahoo, and were able to launch a couple of smartphones. They even went as far as to start the process of acquiring Vizio for a cool $2 billion before things started to fall apart.
LeEco announced they were having financial issues and ended up having to lay off most of its staff from the new headquarters in the US. The founder ended up stepping down as the CEO of Leshi Holding and had to back out of their acquisition of Vizio. Instead, the two agreed to a collaborative partnership which would allow LeEco to leverage Vizio’s smart TVs so they could get more video publishers for its subscription services. This would also allow LeEco to help Vizio its in expansion in the Chinese electronics market.
While that agreement will benefit both companies, the deal to acquire Vizio had a clause that included a $100 million buyer-termination fee. With the financial issues that LeEco is having right now, the company hasn’t been able to pay that fee as originally agreed to. In an attempt to settle things out of court, LeEco offered to pay Vizio $40 million up front, then another $10 million after a new deal closed. The remaining $50 million would then be turned into a capital contribution for the joint venture.
Vizio feels that LeEco never intended to pay the entire $100 million and is attempting to get out of it with this new offer. Vizio has filed a lawsuit against LeEco in a California court so they can attempt to collect their original $100 million fee. To make things worse, all of this has happened after Shanghai court froze $180 million in assets which belonged to the LeEco founder and former CEO, his wife and three LeEco affiliates. LeEco has also announced they will be unable to pay their employees in China until August 1oth.