(CN) – The purchaser of high-end stovemaker Viking Range is seeking $100 million in damages in Delaware superior court, claiming it never would have bought the company had it been told of a defect that caused the company’s stoves to turn on by themselves.
Middleby Marshall Inc. and Viking Range Corporation sued former CEO Fred Carl, Jr. and other former Viking Range officers in New Castle County Superior Court on October 29.
Middleby acquired Viking Range in 2012 for $380 million, but soon discovered the company’s officers had concealed important facts about the its products.
“Had sellers disclosed the truth, Middleby would never have paid anything close to $380 million for VRC, and may not have undertaken the acquisition at all,” the complaint says.
Viking Range sells luxury residential cooking products, including ranges, refrigerators, and freezers
Before the acquisition, Viking Range executives allegedly knew that its ranges contained a design defect that allowed the ranges to turn on by themselves.
“Despite that sellers knew of this issue since at least the spring of 2011, sellers intentionally failed to disclose it to Middleby,” the complaint says.
“This product safety issue has since led to a recall of approximately 60,000 ranges in the United States and Canada. It has also resulted in significant out-of-pocket losses and damage to the brand’s reputation and goodwill that will have an ongoing adverse effect on the sales of Viking products,” Middleby claims.
In addition, Middleby says Viking Range under accrued projected warranty costs ahead of the acquisition in order to beef up its financial statements, and downplayed its severe customer service issues.
“Middleby has suffered actual out-of-pocket warranty and product adjustment costs related to products manufactured before the acquisition that approach 900 percent of the amount reserved at the time of the acquisition,” the complaint says.
Middleby says VRC’s former executives knowingly misled it about the current and future profitability of the company.
“Had sellers not concealed the truth about VRC’s business, Middleby would have paid tens of millions of dollars less for the company, if they had bought it at all.”
Middleby seeks more than $100 million in punitive damages for fraud and breach of contract, and a declaration holding defendants responsible for indemnifying Middleby for all losses related to the recall.
It is represented by Robert Saunders with Skadden, Arps, Slate, Meagher & Flom in Wilmington, Delaware.
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