Walmart is in talks to purchase smart television manufacturer Vizio for over $2 billion, the Wall Street Journal said on Tuesday, a move that could strengthen its advertising firm and control around a fifth of the U.S. television market.
Vizio’s Soaring Shares:
Vizio shares experienced a significant surge on Tuesday, closing up 24.6% and briefly reaching a peak of 36%, marking their highest level since November 2022. Conversely, Walmart’s shares faced a slight decline of about 1%.
Reported Offer Price and Market Cap:
Reports suggest that the offer price for Vizio is nearly 30% higher than its market capitalization of $1.54 billion as of Monday’s close.
Monetizing Walmart’s Reach:
Amidst discussions of a potential acquisition, Walmart has been leveraging its extensive reach and vast shopper data to bolster its advertising business.
Through its platform called Walmart Connect, the retail giant has been selling ads across various digital platforms, including its website and in-store assets like digital displays and connected TVs.
Impact on Advertising Landscape:
The addition of Vizio TVs to Walmart’s advertising ecosystem could provide advertisers like J.M. Smucker and Kraft Heinz with additional screens to showcase their ads to Walmart’s massive customer base, which sees over 130 million shoppers weekly.
Rising Importance of Retail Media Networks:
Retail media networks (RMNs) have emerged as lucrative options for advertisers, particularly as traditional ad platforms like Apple and Google restrict access to third-party data.
RMNs are projected to generate approximately $60 billion in sales this year, highlighting their rapid growth within the advertising industry.
Potential Benefits of Acquiring Vizio:
Acquiring Vizio would grant Walmart access to its substantial user base of nearly 18 million individuals and unlock Vizio’s software platform business, which boasts impressive advertising revenues growing at a rate exceeding 27% annually.
Impact on Roku:
The news of a potential deal between Walmart and Vizio spells negative implications for Roku, which sells smart TVs and streaming devices. Roku shares experienced a decline of approximately 9% following the reports.
Ongoing Discussions and Uncertainty:
Discussions between Walmart and Vizio are ongoing, with no certainty of a finalized deal. Ultimately, the decision to sell will rest with Vizio’s CEO, William Wang, who holds majority voting rights in the company.