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Walmart Announces A $2.3 Billion Acquisition Of Vizio After Surpassing Sales Projections

Walmart Announces A $2.3 Billion Acquisition Of Vizio After Surpassing Sales Projections
Walmart announced on Tuesday that it would acquire smart TV manufacturer Vizio for $2.3 billion, kicking off the reporting season for U.S. retailers with strong fourth quarter earnings following a surge in shoppers due to inflation.
The retail giant's shares increased 3% in premarket trade on the announcement of a 9% dividend hike, the largest increase in almost a decade, and an optimistic yearly sales estimate.

The retailer's fast-growing U.S. advertising sector, where ad sales climbed 22% in the quarter ended January 31 and are a greater margin driver than its core food company, is the subject of Walmart's proposed offer to buy Vizio for $11.50 per share in cash.
As part of the agreement, Walmart also has access to Vizio's SmartCast operating system, which it may use to offer its suppliers the opportunity to run advertisements on streaming devices and earn advertising money. According to prior analyses, it also gives Walmart control over 5% of the American television market.
"The deal makes sense," said Brian Mulberry, client portfolio manager at Zacks Investment Management, which holds Walmart shares.
"I am not at all surprised to see Walmart want to be in that same competitive arena (of retail advertising) because of just the sheer amount of dollars that are available," he said.
The offer price represents a 47% premium over Vizio's closing price of $7.82 on February 12, the day before rumours of potential negotiations surfaced. Tuesday's premarket trade saw Vizio shares up almost 15%, trading at $10.96.
For the fourth quarter that concluded on January 31, Walmart reported a 3.9% increase in comparable sales, excluding fuel, which was higher than the 2.91% predicted by LSEG. eCommerce sales increased 23% globally.
Adjusted earnings for the fourth quarter was $1.80 per share, above the $1.65 per share estimate.
During the late-December Christmas season of last year, a large number of Americans visited Walmart's stores in order to purchase its inexpensive and discounted goods.
Rising rents and persistently high interest rates, however, have sparked worries that consumers will continue to be frugal and that the rate of recovery in spending would be slower than anticipated.
Nevertheless, Walmart stated that it anticipates a 3%–4% increase in consolidated net sales in the 2025 fiscal year, which is substantially higher than the 3.4% increase that analysts had predicted.
The retailer's dividend boost exceeded forecasts in terms of size as well.
"This year’s 9% increase is the largest in over a decade, and a sign of our confidence in our growth potential and cash flow," said John David Rainey, executive vice president and chief financial officer at Walmart Inc.

Christopher J. Mitchell

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