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Walmart Explores $2 Billion Acquisition of Vizio, Aiming to Expand Advertising Reach

New York, February 13, 2024, The Europe Today: Walmart is reportedly in advanced talks to acquire smart-television manufacturer Vizio for over $2 billion, according to sources cited by the Wall Street Journal on Tuesday. This potential move could significantly enhance Walmart’s advertising business while providing control over more than a fifth of the U.S. television market.

Vizio shares experienced a notable surge, closing up 24.6% on Tuesday and briefly reaching a 36% increase, marking their highest point since November 2022. In contrast, Walmart’s shares dipped approximately 1%. The reported offer price is nearly 30% higher than Vizio’s $1.54 billion market cap at Monday’s closing.

Walmart’s interest in Vizio aligns with its strategy to leverage its vast shopper data and extensive reach to monetize advertising on various platforms, including its website, digital displays, connected TVs, and radio. The addition of Vizio TVs to Walmart’s portfolio could offer advertisers more screens to engage with the massive audience of over 130 million shoppers visiting Walmart’s 5,000 U.S. stores weekly.

Walmart’s U.S. ad business, known as Connect, has seen rapid growth since its launch in 2021, contributing approximately $3 billion in sales last year, according to Insider Intelligence. The company’s finance chief highlighted Connect as a high-margin, fast-growing business expected to reshape Walmart’s profit and loss statement in the coming years.

The potential acquisition would position Walmart as a significant player in the retail media networks (RMN) landscape, a burgeoning sector set to generate an estimated $60 billion in sales this year, as traditional ad sellers tighten control over third-party data.

Owning Vizio could grant Walmart access to an active user base of nearly 18 million people and unlock Vizio’s software platform business, experiencing annual advertising revenue growth exceeding 27% at a margin rate surpassing 60%, as reported by Nicholas Zangler, an analyst at Stephens.

Vizio currently holds the leading shelf-share position at Walmart, with approximately 70% of its TVs sold at the retailer. Acquiring Vizio would potentially allow Walmart to control 22% of the U.S. TV market, including its private-label Onn brand and Vizio.

Both Walmart and Vizio have declined to comment on the ongoing discussions. It remains unclear if Vizio products would be available outside of Walmart in the event of a finalized deal.

The news has had a negative impact on Roku, a competitor in the smart TV and streaming device market, with Roku shares declining approximately 9% on Tuesday. Discussions between Walmart and Vizio are ongoing, and a deal is not guaranteed, as reported by the Wall Street Journal, citing sources familiar with the situation. The decision ultimately rests on Vizio’s CEO, William Wang, who founded the company in 2002 and holds majority voting rights.