Walmart to acquire VIZIO in $2.3 billion deal to expand advertising reach

Walmart to acquire VIZIO in $2.3 billion deal to expand advertising reach

Walmart and VIZIO today announced a definitive agreement for Walmart to acquire VIZIO for $11.50 per share in cash, valuing the company at approximately $2.3 billion. This rumored last week.

The acquisition is expected to close in the coming months, subject to regulatory approvals and other customary closing conditions.

Walmart Connect Expansion: The deal will enable Walmart to leverage VIZIO's SmartCast Operating System, reaching over 18 million active accounts, to expand its omnichannel media business, Walmart Connect.

Advertising Growth: VIZIO's growing advertising business, Platform+, which generated the majority of the company's recent profit, aligns with Walmart's focus on creating new advertising opportunities for brands.

Connected TV Leadership: The combined entity will benefit from Walmart's leading position in TV panel sales and VIZIO's expertise in connected TV platforms.

Financial Impact:

  • The transaction is expected to be slightly dilutive to Walmart's earnings per share in the near term due to transaction costs.
  • Walmart plans to finance the acquisition using cash and/or debt.
  • The company expects the acquisition to generate an internal rate of return (IRR) exceeding its reported return on investment (ROI).

Seth Dallaire, Executive Vice President and Chief Revenue Officer, Walmart U.S.: “We believe VIZIO’s customer-centric operating system provides great viewing experiences at attractive price points. We also believe it enables a profitable advertising business that is rapidly scaling. Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week. We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”

The transaction has been approved by both companies' boards of directors.

VIZIO shareholders holding approximately 89% of the voting power have also approved the deal.

Following the closing, VIZIO's stock will no longer be publicly traded.

VIZIO's business will be reported as part of Walmart's U.S. segment.

What is VIZIO?

VIZIO is an American company founded in 2002 by entrepreneur William Wang and two other founding employees. Their focus is on designing and selling:

  • Televisions: Primarily known for affordable HDTVs and smart TVs.
  • Soundbars: Enhance the audio experience for TVs and other devices.
  • Viewer data: VIZIO collects and sells data on user viewing habits, creating revenue from advertising targeted based on this data.
  • Advertising: Directly sells advertising space on its TVs, competing with traditional TV advertising.

Their revenue comes from two main sources:

  • Device sales: While known for competitive prices, they still generate income from selling their hardware products.
  • Platform+ business: This includes both viewer data sales and direct advertising on their platforms, currently generating the majority of their profit.

Read more