Walmart announced Tuesday that it will acquire TV maker Vizio for $2.3 billion in an effort to shore up its growing advertising business.
In a press release published on its website, Walmart said it has come to an agreement to acquire Vizio for $11.50 per share, which equates to approximately $2.3 billion. The acquisition is part of the retail giant's efforts to strengthen its advertising and media business, Walmart Connect, to compete with rival Amazon Prime.
"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," Walmart US executive vice president and chief revenue officer Seth Dallaire said in a statement.
"Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week. We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment," he added.
The acquisition comes after Walmart Connect posted a 22% year-over-year increase in sales in the United States in the fourth quarter of 2023. Walmart's advertising arm reached $3.4 billion last year. However, it only makes up less than 1% of the company's total sales.
Walmart's stock gained 3% in the afternoon trading following the deal announcement.
How Walmart Can Benefit From the Acquisition
Streaming competitors Amazon and Roku sell advertising space on their streaming channels and home screens. They also sell advertising space to apps and media channels on customers' screens.
While it is unclear whether Walmart will take a similar approach, its deal with Vizio would give it access to more than 18 million active subscribers through SmartCast, Vizio's Smart TV operating system. This means Walmart could potentially offer ads through Vizio televisions and create entertainment options exclusively available for customers with Vizio TVs.
"We believe this is the ideal next chapter in VIZIO's history. By bringing our capabilities and resources together, we'll drive innovation and create even more value for our customers," William Wang, chief executive officer of VIZIO, said in the press release.
