Walmart has agreed to pay $2.3 billion to acquire smart television maker Vizio — a move to bolster the retailer’s burgeoning advertising business as it takes on rival Amazon.
The deal, however, is seen as bad news for Roku, according to analysts. Roku, which also sells smart TVs and streaming devices, has an exclusive deal with Walmart to sell products fulfilled by Walmart on Roku devices.
Shares of Roku were down by nearly 7% at the start of Tuesday’s trading session on Wall Street.
The nation’s largest retailer will acquire Vizio in an all-cash deal valued at $11.50 per share.
Vizio’s stock was trading at around $10.98 a share in pre-market activity on Tuesday — more than 15% higher than its $9.53 closing price from Friday.
Walmart also announced its fourth quarter earnings results on Tuesday. The retailer reported that its store sales were up 4% in the three-month period that ended in late January compared to last year.
The company also said that the number of transactions rose 4.3% and its e-commerce business increased by 17%.
Shares of Walmart were also poised to pop before the opening bell on Wall Street on Tuesday. The company’s stock was trading at around 3% higher in pre-market activity.
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 stores each week.
Seth Dallaire, Walmart’s chief revenue officer, said Vizio was attractive due to its “customer-centric operating system” which “provides great viewing experiences at attractive price points.”
Dallaire said that the company envisions Vizio and Walmart Connect, the retailer’s media division, working symbiotically as a result of the acquisition.
Since launching in 2021, Connect has been growing at a double-digit clip, generating sales of about $3 billion last year, according to a report from Insider Intelligence.
“We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment,” Dallaire said.
Vizio’s SmartCast Operating System has amassed more than 18 million active accounts, according to Walmart.
Companies that advertise with Walmart will now be able to reach more potential customers thanks to the acquisition.
“By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers,” Vizio CEO William Wang said.
Wang predicted that Vizio’s “technology will help bring a scaled, connected TV advertising platform to Walmart Connect.”
“This transaction delivers immediate and compelling value to Vizio stockholders and is a true testament to the hard work of the entire Vizio team.”
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