Walmart Confirms Report to Acquire Smart TV Maker Vizio At a Huge Premium
Walmart confirmed today (Feb. 20) in its fourth-quarter earnings report that it has agreed to acquire smart TV maker Vizio, including its SmartCast operating system, in a deal worth $2.3 billion, marking the retail giant’s foray into the content streaming and connected TV business.
Talks of the deal were first reported last week, which sent Vizio’s stock surging more than 30 percent. Under the official deal announced today, Walmart will pay $11.50 apiece for Vizio’s outstanding shares, representing an over 20 percent premium above Vizio last closing price of $9.53 on Feb. 16. Vizio shares jumped 15 percent today on the news. After the merger, Vizio will report financial results as a part of Walmart’s U.S. segment, according to the announcement.
“We believe this is the ideal next chapter in Vizio’s history,” said Vizio’s founder and CEO William Wang. “By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers.”
The deal puts both companies in a stronger position as they look to establish themselves in the streaming and smart TV, also called connected TV (CTV), businesses. Walmart’s main competition is Amazon (AMZN), which has built out its own Prime Video streaming service and smart TV brand, fireTV. Apple (AAPL)’s Apple TV and Google (GOOGL)’s Chromecast are also major players in the CTV industry.
“We believe Vizio’s customer-centric operating system provides great viewing experiences at attractive price points,” Seth Dallaire, Walmart’s executive vice president and chief revenue officer, said in a statement. “We also believe it enables a profitable advertising business that is rapidly scaling.”
Walmart’s advertising business made up less than 1 percent of its business in 2022, but the company has been searching for ways to grow that sector, one way being in-store advertising on TV screens and in checkout aisles. Owning a CTV company gives Walmart access to potential ad revenue from services like Netflix and Disney+, whose ad-tier subscriptions are pre-installed in Vizio TVs.
Vizio is still not nearly as big as the leading smart TV company Roku, a $13 billion business which owns about half of the U.S. CTV device market. But Roku’s stock has declined sharply in recent days, after reports surfaced about Walmart’s interest in Vizio and the company reported mixed four-quarter earnings around the same time. Walmart sells both Vizio and Roku products in its stores.