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On Wednesday, VIZIO Holding Corp (NYSE:VZIO) had its stock rating downgraded from “buy” to “neutral” by Roth/MKM and the revised price target was set at $11.50 from the previous $12.00. The changes follow the announcement that VIZIO will be acquired by retail giant Walmart (NYSE:) for approximately $2.3 billion, or $11.50 per share. The purchase price represents an approximately 21% premium to VIZIO's stock price as of last Friday's market close, and about a 50% premium before the Wall Street Journal reported the deal.
The acquisition is expected to go well as it aligns with Walmart's strategic interests, especially considering that over 60% of VIZIO's device units are distributed through Walmart and Sam's Club stores. This transaction is further supported by the fact that 89% of his shareholders, a significant majority with voting rights, approved this transaction. VIZIO's proprietary platform, his SmartCast OS, is also considered a strategic asset in the acquisition.
Roth/MKM's downgrade of VIZIO to 'neutral' reflects the belief that there are no better suitors for the company given its current bid and valuation. This valuation is attracting attention as being approximately three times the sales of the VIZIO platform. With the terms of the transaction made public and shareholder approval obtained, the market now sees the acquisition as the likely outcome of VIZIO's standalone operations.
The acquisition by Walmart is poised to increase the retailer's presence in the consumer electronics space and is a significant move for the company, which has expanded its footprint in various markets. For VIZIO, becoming part of Walmart's portfolio will mean the end of its operation as an independent entity, assuming the transaction closes as planned.
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