Alphonso founders sue LG Electronics over $1.5 billion advertising tech takeover

Eight Silicon Valley entrepreneurs claim in a California complaint that global electronics manufacturer LG Electronics Inc. executed a calculated corporate takeover of their advertising technology startup Alphonso Inc., systematically dismantling contractual protections worth potentially $1.5 billion. The November 10, 2025 filing in Santa Clara County Superior Court details what plaintiffs characterize as a multi-year scheme to eliminate liquidity rights and board representation negotiated when LG's subsidiary Zenith Electronics acquired majority control in December 2020.

The lawsuit names LG Electronics Inc., its U.S. subsidiary LG Electronics U.S.A. Inc., and six individual directors who served on Alphonso's board. Plaintiffs include company co-founders Ashish Chordia, Lampros Kalampoukas, Raghu Kodige, Richard Andrades, Ravi Sarma, and Narendra Sirugudi, along with additional shareholders and family trusts holding equity stakes.

Background of Zenith's 2020 acquisition

Alphonso's founders built the company from its 2012 formation into a business generating upwards of $270 million in annual revenue by 2022. The startup developed automatic content recognition technology that collects viewing data from smart TVs to enable targeted advertising and content recommendations. ACR technology analyzes what users watch second-by-second, creating datasets valuable to television manufacturers and advertising platforms.

LG Electronics began pursuing an Alphonso acquisition in 2019 after its internal smart TV advertising business failed to exceed $10 million in revenue despite five years of investment. According to the complaint, LG approached Alphonso repeatedly throughout 2019 and 2020, finally inducing negotiations in mid-2020. The parties structured a deal where Zenith, a wholly-owned LG subsidiary, would invest approximately $78 million for 55% ownership.

The founders negotiated specific protections in exchange for relinquishing control. A December 23, 2020 stockholders' agreement established three scheduled tender offers at fair market value on March 31, 2024, March 31, 2025, and March 31, 2026. The agreement also granted shareholders the right to demand an initial public offering after the third anniversary of Zenith's investment. These liquidity provisions were described as "heavily negotiated" and essential to the transaction's structure.

The agreement provided founders the right to appoint three of seven board directors, with Zenith appointing the remaining four. Founders also obtained veto rights over certain board decisions, including related-party transactions between Alphonso and LG, modifications to tender offer terms, and IPO postponements beyond December 2025. Section 12 of the stockholders' agreement required Alphonso to use "reasonable efforts" to ensure these rights remained effective.

Internal planning for minority shareholder removal

The complaint details internal LG communications showing executives conceived a plan codenamed "Project Wall-E" in mid-2022 to terminate all founder-employees and eliminate their board representation. An internal email from LG's Head of Global Alliances Tom Hahm explained what LG termed the "Nuclear Bomb" option. The stockholders' agreement stated that director-designation rights would be "null and void if no Key Holder serves as an officer or employee of the Corporation at such time."

According to the complaint, Hahm wrote in a mid-2022 email that "if we fire all the Key Holders, they have no ability to place a person on the Board. And, remember that we can fire anyone at anytime. After we fire the Key Holders, the new Board (filled with LG people) can alter or change . . . and terminate the Shareholders Agreement. Termination of the Shareholders Agreement removes all obligation in the Shareholders Agreement, which includes IPO, tender offer, etc."

Minutes from an October 26, 2022 meeting attended by LG executives and Alphonso board members discussed options for "termination of all [K]ey share holders." The meeting participants included defendants Chris Jo, Edward Lee, Damon Park, Matthew Durgin, Ronald Wasinger, and non-party Saeyi Park. Meeting records indicated the task force would "[s]et our direction toward termination of all [K]ey share holders."

LG's internal documents valued Alphonso between $700 million and $1.4 billion as of November 29, 2022. Internal emails cited in prior Delaware litigation revealed intentions to "buy [out the Key Holders] at the lowest possible price."

December 2022 terminations and board removal

On December 16, 2022, which LG termed "D-Day," defendant Ronald Wasinger called a special board meeting without providing an agenda. The four LG-affiliated directors voted to approve termination of five founder-executives: Kodige, Chordia, Kalampoukas, Sandeep Beotra, and Ashish Baldua. The board simultaneously appointed Adam Sexton as Chief Operating Officer and Interim CEO. Sexton then terminated two additional founders, Andrades and Sarma, who held non-executive positions.

Later that same day, Zenith executed a written consent to remove the three founder-appointed directors from Alphonso's board. The removal relied on the stockholders' agreement provision requiring at least one founder to serve as an officer or employee to maintain director-designation rights.

The terminated founders filed suit in Delaware Chancery Court in 2023 challenging the board removals. On January 4, 2024, Delaware Vice Chancellor Nathan Cook found the terminations pretextual and the board removals invalid. The court ordered reinstatement of director-designation rights. The Delaware Supreme Court affirmed that decision.

Inventory agreement pricing disputes

A separate but related dispute involved pricing terms in agreements where LG sold advertising inventory to Alphonso. LG devices provided ad space that Alphonso resold to third-party advertisers. The April 26, 2021 inventory agreement initially provided inventory as a "free trial" during 2021 without pricing terms.

To establish pricing, Alphonso hired PricewaterhouseCoopers to conduct transfer pricing analysis. LG pushed for KPMG to perform the analysis instead due to LG's existing relationship with that firm. Alphonso agreed on condition that KPMG would be engaged solely by Alphonso as client. KPMG selected the internal Comparable Uncontrolled Transaction method and affirmed PwC's pricing analysis. The January 26, 2022 first amendment to the inventory agreement incorporated these pricing terms.

In March 2022, defendant Chris Jo began pushing to change the inventory agreement's pricing terms to charge Alphonso substantially higher rates. KPMG issued a June 30, 2022 memo revising its prior analysis, addressing the memo only to LG rather than its client Alphonso. The complaint alleges that internal LG documents acknowledged the proposed amendment would benefit LG while harming Alphonso's interests and conflicting with directors' duties, but coached board members to "[a]pproach the matter as a compliance risk issue" to prevent fiduciary duty concerns.

Alphonso retained PwC to provide a second opinion. PwC confirmed the original transfer pricing remained reasonable and consistent with arm's-length bargaining standards. Despite this analysis, LG continued demanding amendments, which the founder-appointed directors opposed.

Coercive tactics and second amendment

On February 14, 2024, shortly after the Delaware court reinstated founder directors and one day before a scheduled board discussion of the first tender offer, LG notified Alphonso it would terminate the inventory agreement in 60 days unless pricing was renegotiated. The complaint characterizes this as creating an artificial crisis to force amendments depressing Alphonso's profits.

Under pressure from LG's termination threat, the board voted on a second amendment to the inventory agreement on June 6, 2024. The amendment capped Alphonso's operating profit margin at 15%, with excess profits flowing directly to LG. The amendment applied retroactively to the first half of 2024, extracting over $100 million in 2024 alone according to the complaint.

The first scheduled tender offer, contractually required by March 31, 2024, did not complete until November 2024. The complaint alleges the amended inventory agreement's retroactive application and profit caps depressed Alphonso's valuation used in calculating the tender offer price. According to the lawsuit, LG has siphoned over $500 million from Alphonso to LG's coffers over four years since the parties first entered the inventory agreement.

IPO delays and ongoing disputes

In January 2025, founder directors exercised their right to demand an IPO by serving notice under Section 9.1 of the stockholders' agreement. That provision required Alphonso to file a Form S-1 registration statement within 60 days. The complaint alleges LG prevented filing for over six months beyond the contractually mandated deadline.

The second scheduled tender offer, required by March 31, 2025, did not commence until June 2025. The complaint alleges Zenith failed to disclose that one valuation firm used improper methodology and another firm's work contained mathematical errors artificially depressing the per-share price. Four months later, Zenith still has not relaunched the corrected tender offer.

Most recently, LG has suggested it may seek further amendments to the inventory agreement. Since July 2025, LG has allegedly forced Alphonso to provide promotional services exceeding the agreed-upon amounts without additional compensation, violating founder directors' veto rights over related-party transactions.

Legal claims and damages sought

The complaint asserts four causes of action. The tortious interference with contract claim alleges LG intentionally caused Alphonso and Zenith to breach the stockholders' agreement by orchestrating founder terminations and depriving shareholders of liquidity rights. The tortious interference with prospective economic advantage claim addresses harm to founders' employment relationships, equity value, and liquidity expectations.

A claim under California Penal Code Section 496 alleges LG deliberately diverted Alphonso's profits to itself through forced inventory agreement amendments, depriving minority shareholders of property interests rightfully belonging to them. The trespass to chattels claim alleges LG intentionally interfered with shareholders' liquidity rights by depressing Alphonso's stock value through self-dealing transactions.

Plaintiffs seek compensatory damages estimated to exceed $1.5 billion, treble damages under California Penal Code 496, punitive damages, attorneys' fees, and declaratory relief. The complaint alleges LG engaged in wrongful conduct with malice, oppression, or fraud.

The November 10, 2025 filing represents the latest development in ongoing disputes between LG Electronics and Alphonso's minority shareholders. LG Ad Solutions, as the advertising technology division now operates, has maintained business operations and continued platform expansion throughout the litigation period.

Industry context

The dispute unfolds as connected TV advertising technology attracts significant corporate investment and valuation scrutiny. Another Alphonso co-founder filed suit in July 2025 against valuation firm Kroll, alleging the firm deliberately undervalued Alphonso by nearly $100 million to benefit LG Electronics in shareholder disputes.

LG Ad Solutions operates one of the world's largest ACR datasets with 200 million LG Smart TVs globally. The platform expanded to Australia in July 2025 and renewed partnerships with major advertising platforms throughout 2024 and 2025.

Connected TV advertising spending is projected to reach $33.35 billion in 2025, with CTV's share of media budgets doubling from 14% in 2023 to 28% in 2025. The advertising technology sector has experienced consolidation pressures alongside rapid growth, creating tensions around valuation methodologies and minority shareholder protections in acquisition structures.

Timeline

• December 2012: Alphonso Inc. founded by eight entrepreneurs specializing in smart TV advertising technology
• 2019: LG Electronics begins pursuing Alphonso acquisition to bolster failing smart TV ad business
• December 23, 2020: Zenith Electronics acquires 55% controlling stake for approximately $78 million with stockholders' agreement protecting minority rights
• April 26, 2021: Alphonso and LG sign inventory agreement for ad space without pricing terms
• January 26, 2022: First amendment to inventory agreement establishes pricing based on independent analysis
• March 2022: LG begins pushing to revise inventory agreement pricing to extract higher payments
• Mid-2022: LG conceives "Project Wall-E" to terminate all founder-employees and eliminate board representation
• December 16, 2022: LG-affiliated directors vote to terminate seven founders and remove three founder-appointed board directors
• January 4, 2024: Delaware Chancery Court finds terminations pretextual and board removals invalid
• February 14, 2024: LG threatens to terminate inventory agreement unless pricing renegotiated
• June 6, 2024: Board approves second amendment capping Alphonso's profit margin at 15% with retroactive application
• July 15, 2025: Co-founder Lampros Kalampoukas sues valuation firm Kroll alleging deliberate undervaluation
• November 10, 2025: Eight founders and associated trusts file California lawsuit seeking over $1.5 billion in damages

Summary

Who: Eight Alphonso Inc. co-founders and shareholders, including Ashish Chordia, Lampros Kalampoukas, and Raghu Kodige, filed suit against LG Electronics Inc., LG Electronics U.S.A. Inc., and six individual board directors. Alphonso developed automatic content recognition technology for smart TV advertising before LG's subsidiary Zenith Electronics acquired majority control in December 2020.

What: The plaintiffs allege LG executed a systematic scheme to eliminate contractual protections negotiated during the 2020 acquisition, including scheduled tender offers, IPO rights, and board representation. The complaint details a plan codenamed "Project Wall-E" involving pretextual termination of founder-employees, forced amendments to intercompany agreements diverting profits to LG, and delays in contractually required liquidity events. Plaintiffs seek compensatory damages exceeding $1.5 billion plus treble damages and punitive damages.

When: The alleged conduct began in March 2022 when LG started pushing inventory agreement amendments, escalated with December 16, 2022 terminations of seven founders, and continues through November 2025 with ongoing delays of the second tender offer and IPO filing. The lawsuit was filed November 10, 2025 in Santa Clara County Superior Court.

Where: The case centers on Mountain View, California-based Alphonso Inc., with alleged planning occurring across LG operations in Seoul, Korea and Santa Clara, California offices. The lawsuit was filed in California Superior Court for Santa Clara County, while related Delaware Chancery Court litigation addressed board removal validity in 2023-2024.

Why: The founders claim LG sought to capture Alphonso's increased value for itself rather than sharing gains with minority shareholders through contractually promised liquidity mechanisms. Internal LG valuations placed Alphonso's worth between $700 million and $1.4 billion by late 2022, approximately ten times its $110 million valuation at acquisition. The complaint alleges LG systematically suppressed that valuation through profit-diverting agreements and delayed liquidity events to acquire minority shares at depressed prices.