WALMART is in talks to buy smart-television manufacturer Vizio for more than US$2 billion, The Wall Street Journal (WSJ) reported on Tuesday (Feb 13), a move that could bolster its advertising business and give it control of more than a fifth of the United States television market.
Vizio shares closed up 24.6 per cent on Tuesday. They briefly surged 36 per cent to their highest since November 2022. Walmart’s shares fell about 1 per cent. The reported offer price is nearly 30 per cent higher than Vizio’s US$1.54 billion market cap at close on Monday.
The talks come at a time Walmart is increasingly monetising its reach and troves of shopper data to sell ads on its properties including its website and store assets such as digital displays, connected TVs and radio.
Adding Vizio TVs could give companies including JM Smucker and Kraft Heinz more screens to display their ads to the more than 130 million shoppers that visit Walmart’s 5,000 US stores each week.
Since launching in 2021, Walmart’s US ad business, called Connect, has been growing at a double-digit clip, generating sales of about US$3 billion last year, according to a report from Insider Intelligence. Walmart’s finance chief singled out Walmart Connect as one of its fast-growing, high-margin businesses that would change the composition of Walmart’s profit and loss statement over the next five years. More of its future profitability is likely to come from selling ads on Walmart properties than by selling everyday essentials such as milk and toilet paper that the company is known for, he said.
Retailers’ ad businesses, commonly called retail media networks (RMN), have become an attractive option for advertisers as traditional ad sellers such as Apple and Google crackdown on the amount of third-party data they share with advertisers.
As a result, RMNs have become the fastest-growing part of the US ad industry and are slated to generate about US$60 billion in sales this year, according to Insider Intelligence estimates.
Owning Vizio would give Walmart access to an active user base of nearly 18 million people and help unlock Vizio’s own software platform business that has annual advertising revenues growing north of 27 per cent at a more than 60 per cent margin rate, said Nicholas Zangler, an analyst at Stephens.
Vizio commanded the No 1 shelf-share position at Walmart and nearly 70 per cent of its TVs are sold at the retailer, the analyst said. By acquiring Vizio, Walmart could potentially control 22 per cent of the US TV market between its private-label Onn brand and Vizio, he added.
Walmart and Vizio declined to comment.
It was not immediately clear if Vizio products would be available outside of Walmart if a deal is inked.
The news is a negative for Roku, which also sells smart TVs and streaming devices, and has an exclusive deal with Walmart to sell products fulfilled by Walmart on Roku devices, Zangler said. Roku shares ended down about 9 per cent on Tuesday. Discussions between Walmart and Vizio are ongoing, and a deal may not happen, the WSJ report said, citing sources familiar with the situation.
The decision to sell Walmart will rest entirely on Vizio’s CEO, William Wang, who founded the company in 2002 and holds majority voting rights, Zangler said. REUTERS
