Walmart in talks to acquire Vizio for over $2 Billion

Walmart is reportedly negotiating to purchase Vizio, a leading smart-television manufacturer, for more than $2 billion. The deal is set to significantly enhance Walmart's advertising capabilities and grant it control over a substantial portion of the U.S. television market.

Transaction Snapshot

  • Deal value: More than $2 billion
  • Deal type: Acquisition

Following the news, Vizio's stock price soared by 24.6%, reaching its highest point since November 2022, while Walmart's shares saw a decrease of about 1%. The offer price for Vizio is nearly 30% higher than its market cap of $1.54 billion at Monday's close. Walmart's strategic move towards acquiring Vizio is part of its larger effort to monetise its extensive customer data and advertising space on its various properties, including its website and in-store digital displays.

Walmart's advertising business, known as Connect, has shown robust growth, with sales reaching about $3 billion last year. The acquisition of Vizio could provide advertisers with additional platforms to reach Walmart's weekly shopper base of over 130 million. In the U.S., retail media networks are gaining traction as traditional ad platforms tighten data sharing, making them a lucrative part of the U.S. ad industry, expected to generate around $60 billion in sales this year.

Owning Vizio would not only afford Walmart access to nearly 18 million active users but also enhance its software platform business, with advertising revenues growing over 27% annually. Analysts point out that Vizio holds the number one shelf-share position at Walmart, with nearly 70% of its TVs sold through the retailer, potentially allowing Walmart to control 22% of the U.S. TV market. This acquisition would also present a challenge to Roku, given its exclusive deal with Walmart, especially as Roku's shares dropped about 9% following the announcement.

Discussions between Walmart and Vizio are ongoing, and there is no certainty a deal will materialise. The move underscores the growing intersection of retail media and connected TV advertising, highlighting Walmart's ambition to expand its presence in the high-margin ad business, potentially shifting its revenue composition away from traditional retail sales.

In the broader context, this acquisition highlights the dynamic changes within the retail and connected-TV industries, indicating a significant push towards integrating retail media with device-level advertising. Walmart's potential control over Vizio could reshape the competitive landscape, challenging other players like Roku, Amazon, and Google/YouTube in the connected-TV advertising market.

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