Walmart acquires TV maker Vizio for $2.3 billion to boost its ad business

Walmart said on Tuesday that it has agreed to acquire TV manufacturer Vizio for $2.3 billion in a strategic move aimed at boosting its lucrative advertising business. As part of the deal, Walmart will acquire Vizio at $11.50 per share, for a total of $2.3 billion in cash. The acquisition was disclosed alongside Walmart’s fourth-quarter earnings report.

The acquisition follows Walmart’s $1.4 billion buyout of hedge fund Tiger Global’s remaining stake in the Indian e-commerce startup Flipkart less than a year ago. Vizio’s shares surged to $9.53 on Friday after reports of the deal emerged, experiencing a 15% increase during early trading on Tuesday, CNBC reported.

Walmart and its Sam’s Club have historically been major retailers of Vizio devices. However, the retail giant sees an opportunity to enhance its advertising business through Vizio’s SmartCast Operating System, allowing users to stream free ad-supported content on their TVs.

In its pursuit of increased profits, Walmart has sought to expand its media business, Walmart Connect, which boasts higher profit margins compared to traditional retail sectors. The advertising sales in this segment grew by 22% in the fourth quarter.

Seth Dallaire, the executive vice president and chief revenue officer of Walmart U.S., expressed optimism about Vizio’s customer-centric operating system, highlighting its potential for delivering great viewing experiences at attractive price points and facilitating a rapidly scaling, profitable advertising business.

“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.

This move is a strategic response to Walmart’s competition with Amazon in the growing ad segment. The acquisition of Vizio’s platform is expected to extend the reach for companies advertising with Walmart, given Vizio’s SmartCast system’s 18 million active accounts.

Walmart also hinted at the possibility of providing “innovative television and in-home entertainment and media experiences” post-acquisition of the TV maker.