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Walmart To Acquire TV Maker Vizio for $2.3 Billion To Expand Its Ad Business
February 21, 2024
On Tuesday, Walmart and Vizio announced that they made a deal for the retail giant to acquire the TV maker for $11.50 per share, in cash, which amounts to around $2.3 billion.
After reports of this potential acquisition were shared last week, Vizio’s shares shot up. According to CNBC, they closed at $11.08 on Tuesday after another 16% hike.
For a long time, Walmart and its Sam’s Club warehouse chain have been big sellers of Vizio products. However, through this acquisition, Walmart is attempting to strengthen its ad business by leveraging Vizio’s SmartCast Operating System. This system enables users to stream free ad-supported content directly on their TVs. Walmart aims to take advantage of this system to expand its media business Walmart Connect.
According to a report from Insider Intelligence, Walmart Connect, which distributes ads utilizing shopper data across in-store digital displays, connected TVs, radio, and its website, has experienced double-digit growth since its inception in 2021 and grew 30% for fiscal year 2024. This high-margin business generated approximately $3 billion in revenue last year, although it lags significantly behind Amazon’s $35 billion in ad revenues.
President and CEO Doug McMillon said, “When you grow your digital reach, and you’ve got an e-commerce business that’s scaling like ours is, you get an opportunity to sell advertisements, and we can connect the dots for advertisers.”
In a statement, Seth Dallaire, executive vice president and chief revenue officer of Walmart U.S., said, “There is a lot to be excited about with this acquisition. 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.”
Walmart’s ownership of the Vizio platform will extend the reach for companies advertising with the retailer. According to the company’s announcement, Walmart stated that Vizio’s SmartCast system boasts 18 million active accounts.
The retailer also said that the acquisition enables it to “connect with and serve its customers in new ways including innovative television and in-home entertainment and media experiences.”
Walmart’s earnings report on Tuesday revealed strong performance for the company for Q4 and FY24. McMillon said, “Our team delivered a great quarter, finishing off a strong year. We crossed $100 billion in eCommerce sales and drove share gains as our customer experience metrics improved, even during our highest volume days leading up to the holidays. We’re proud of the team and excited about building on our momentum as we work to bring prices down for our customers and members.”
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