Walmart buying VIZIO for over $2 billion: Here’s what that means

Walmart announced plans to buy out TV maker VIZIO Holding Corp. for approximately $2.3 billion

The acquisition, per Walmart’s news release, is to assist the retail giant in strengthening its advertising program through VIZIO’s SmartCast Operating System (OS). The proposed offer is reportedly set for “$11.50 per share in cash.”

According to CNN, if the deal is completed, it would allow Walmart to offer its suppliers the opportunity to display advertising on television streaming devices, rather than only through its physical stores and current website.

Walmart and its warehouse chain Sam’s Club have been major sellers of VIZIO televisions since its 2002 founding, reported CNBC.

Why would Walmart make this acquisition?

As reported by CBS News, VIZIO’s SmartCast has over 18 million active accounts, connecting users to Apple’s AirPlay and Amazon’s Alexa accessibilities.

If the deal is completed, it would allow Walmart to offer more advertising on VIZIO TVs and make exclusive entertainment options for its consumers.

The acquisition “gives Walmart a lot more power and reach in the world of advertising and puts it on a more level playing field with the likes of Amazon,” said Neil Saunders, a retail analyst at GlobalData Retail, per CNN.

Saunders also said to CBS News that the deal could attach Walmart+ to the TVs in a “membership scheme.”

Along with the push for competition, the store is attempting to grow its Walmart Connect media business, which, according to CNBC, holds higher profit margins than the store’s clothing or groceries.

Walmart’s U.S. executive vice president and chief revenue officer Seth Dallaire shared in the news release, “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.”

Dallaire added that the combination of the two companies — Walmart and VIZIO — can be effective as they “redefine the intersection of retail and entertainment,” via the news release.

Walmart’s events and lower earnings leading to the acquisition

Although the retailer had a strong holiday season, CBS News mentioned that there’s been a decline in overall consumer shopping this past month.

For example, The Associated Press reported a 0.8% fall in retail sales from last January. Economists claim the fall was partially due to the colder weather, but did suggest that “higher interest rates and other financial hurdles” could’ve lead consumers to buckle and fade away from the prices.

In addition, per CNN, Walmart has invested billions of dollars in recent years to strengthen its digital operation, which in turn has led the company to sacrifice profits elsewhere.

During the digital initiative, Walmart pitched to advertisers to expand their customer reach in an effort — against other retailers — to grow their advertising services similarly to Amazon’s profitable system.

Walmart’s advertising business reached over $3 billion last year, but made up “less than 1% of its total sales,” reported CNN.

However, Walmart Connect grew 30% for fiscal year 2024, bringing to life “distinct omnichannel solutions for advertisers of all sizes and accelerate shared growth,” according to the news release.

“By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers,” said William Wang, chief executive officer of VIZIO, per the news release. “Walmart’s approach is aligned with VIZIO’s mission and vision, and our technology will help bring a scaled, connected TV advertising platform to Walmart Connect.”