US TV maker Vizio files 100 mln lawsuit against LeEco for failed acquisition

‍The US based television maker Vizio sued LeEco for not following through on a 2 billion US dollars merger.

The Chinese technology firm announced its intention to purchase Vizio last July with a deal allegedly included a 100 million US dollars buyer-termination fee.

The merger fell through in April amid LeEco's financial problems. The two companies then agreed on a joint distribution deal which would have included LeEco's paying 40 million US dollars to Vizio up front, and 10 million US dollars at the closure of the deal with a remaining 50-million-US-dollar investment in the distributions.

LeEco's former CEO Jia Yueting resigns in May as company was going through bumpiness and looking for better management. [Photo: VCG]

Vizio has renounced the immediate payment recently after LeEco paid off the first 40 million US dollars, alleging that LeEco purposely set up the joint-venture deal in effort to reduce its liability by 60 percent. The US company is now seeking 60 million US dollars in damages through Santa Ana federal court in US State of California.

Vizio claims LeEco intended to use the publicly announced merger deal with VIZIO to "gain or try to obtain access to VIZIO’s large corporate customers and key decision makers thereat for their own purposes and by means of confidential customer information that had been developed" and "provide LeEco with access to VIZIO’s confidential customer information, including contact information, account history, purchasing needs or requirements, contract terms, and the like.”

Meanwhile, the US company has experienced financial crisis for leaking confidential viewing data. In February this year, Vizio was ordered to pay 2.2 million US dollars to settle charges by US Federal Trade Commission and the Office of the New Jersey Attorney General for selling secretly collected user data to the third parties.

LeEco has not commented on the lawsuit thus far.

Vizio is ordered in February to pay 2.2 million for selling secretly collected user data to the third parties. [Photo: VCG]

The lawsuit comes just days after Shangahi court froze 182 million US dollars' worth assets including LeEco stock which belong to the former CEO Jia Yueting, his wife and three LeEco affiliates. This led to even more outstanding payments to  LeEco employees.

At the end of last May, Jia resigned as the CEO as the company continued to struggle "regulatory headwinds," cash crunch and bumpiness into the US market. Besides the decision to abandon its plan to acquire Vizio, LeEco also nixed its video service EcoPass in the same month.