On Wednesday, VIZIO Holding Corp (NYSE:VZIO) saw its stock rating downgraded from Buy to Neutral by Roth/MKM, with a revised price target set to $11.50, down from the previous $12.00. This change comes in the wake of VIZIO's announcement that it will be acquired by retail giant Walmart (NYSE:WMT) for approximately $2.3B, or $11.50 per share. The acquisition price represents a roughly 21% premium over VIZIO's share price at the close of the market last Friday and about a 50% premium prior to reports of the deal by the Wall Street Journal.
The acquisition is expected to proceed smoothly, as it aligns with Walmart's strategic interests, particularly given that over 60% of VIZIO's device units are distributed through Walmart and Sam's Club stores. The deal is further supported by the fact that a significant majority of voting shareholders, 89%, have approved the transaction. The SmartCast OS, VIZIO's proprietary platform, is also seen as a strategic asset in the acquisition.
Roth/MKM's downgrade of VIZIO to Neutral reflects the belief that there will not be additional suitors for the company, given the current bid and valuation. The valuation is noted to be around three times the sales of VIZIO's platform. With the deal terms public and shareholder approval secured, the market is now looking at the acquisition as a likely conclusion to VIZIO's independent operations.
The acquisition by Walmart is poised to enhance the retailer's presence in the consumer electronics sector and is a significant move for the company, which has been expanding its footprint in various markets. For VIZIO, becoming part of Walmart's portfolio marks the end of its run as an independent entity, assuming the closure of the transaction as planned.
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