WalmartViziogrows its high-profit ad business.
Walmart will acquire Vizio for $2.3 billion, or $11.50 per share, in cash. The big-box retailer announced the acquisition as it reported its fourth-quarter earnings.
Vizio shares, which spiked after reports of the deal first emerged last week, closed at $9.53 on Friday. They jumped 15% during early trading Tuesday.
Walmart and its Sam’s Club warehouse chain have long been major sellers of Vizio devices. But in buying the company, Walmart touted the potential to boost its ad business through Vizio’s SmartCast Operating System, which allows users to stream free ad-supported content on their TVs.
As it pushes for higher profits, the retail titan has tried to expand its media business Walmart Connect, which comes with bigger profit margins than selling groceries or clothing. The segment’s advertising sales grew 22% in the fourth quarter.
“We believe VIZIO’s customer-centric operating system provides great viewing experiences at attractive price points. We also believe it enables a profitable advertising business that is rapidly scaling,” said Seth Dallaire, executive vice president and chief revenue officer of Walmart U.S., in a statement.
The move comes as Walmart tries to compete with Amazon’s growing ad segment.
Walmart’s control of the Vizio platform will give companies that advertise with the retailer a greater reach. In a news release, Walmart said Vizio’s SmartCast system has 18 million active accounts.
The retailer also said it could offer “innovative television and in-home entertainment and media experiences” after it acquires the TV maker.
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