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Who will benefit from Wal Mart's $2.3 billion acquisition of Vizio China's color TV foundry?

因醉鞭名马幌
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On the evening of February 20, Wal Mart announced that it had reached an agreement with the American TV manufacturer Vizio. Wal Mart would purchase Vizio with cash or loans at a price of 11.5 dollars per share, with a total transaction price of about 2.3 billion dollars. The First Finance reporter noticed that the transaction must be approved by the regulatory authority. After the transaction is completed, Vizio will no longer be publicly listed, but will report as part of Wal Mart's U.S. branch. Vizio's stock price rose 16.26% on the latest trading day.
The reporter from First Finance and Economics has learned that Zhaochi (002429. SZ), Kangguan Technology (001308. SZ), Sichuan Changhong (600839. SH), etc. are the main color TV OEM enterprises of Wal Mart, while Mass Entrepreneurship, Video under BOE (000725. SZ), TPV Technology (000727. SZ), etc. are the main color TV OEM enterprises of Vizio.
On the morning of February 21st, Zhaochi Shares rose 2.71% to 5.31 yuan/share, Kangguan Technology rose 3.17% to 27.05 yuan/share, Sichuan Changhong rose 0.43% to 4.69 yuan/share, BOE rose 1.26% to 4.01 yuan/share, and Guanjie Technology rose 1.67% to 2.44 yuan/share.
According to data provided by research firm AVC Revo to First Financial reporters, the overall TV contract manufacturing market in North America reached 24 million units in 2023, a year-on-year increase of 37.3%. Among them, Wal Mart's own brand ONN is the largest TV OEM customer in North America, accounting for 24.4% of the total TV OEM orders in North America; Vizio also adopts a full contract manufacturing model, accounting for 18.6% of North American television contract manufacturing orders, ranking second.
Chen Hui, General Manager of OVIROVO, told reporters that Vizio has been adopting a cost leading competitive strategy since its establishment and has consistently ranked in the top five in the North American market. After this acquisition, it is considered that centralized procurement has the opportunity to improve cost competitiveness. After 2025, the orders of North American TV OEM industry have the opportunity to further concentrate on Wal Mart.
"The competitive landscape of television contract manufacturers in the North American market may be affected, and market competition will become more intense," said Chen Hui. In 2023, the main TV OEM enterprises in the North American market will be MTC (Zhaochi), MOKA (Maojia, a subsidiary of TCL Technology), TPV (TPV Technology), and Video. Their share of shipments will all exceed 10%, and MTC will occupy the first place in the North American market for TV OEM shipments with Wal Mart's large orders.
At present, the main TV OEM enterprises of Wal Mart are MTC, KTC (Kangguan Technology), Changhong, etc., while the main TV OEM enterprises of Vizio are group innovation, video, TPV, etc. Chen Hui believes that after this acquisition, the structure of Wal Mart TV OEM enterprises will face restructuring. In the current external environment of low TV demand, how TV OEM enterprises play a competitive advantage in the reform and win more orders becomes the key to the survival and growth of enterprises.
According to public information, in Vizio's current equity structure, founder Wang Wei holds 53.69% of the shares, Ruixuan Technology holds 7.93%, and Qunchuang Optoelectronics and its parent company Hon Hai Precision hold 4.54% and 2.43% respectively.
"After this acquisition, it is expected that the proportion of Taiwan, China OEM in North American TV OEM market may decrease." Chen Hui estimated that the entire Hon Hai Group had previously accounted for 15% of the equity of Vizio, which is the second largest shareholder after Wang Wei. With the acquisition of Vizio by Wal Mart, the equity of Taiwan, China OEM enterprises in Vizio has withdrawn, and there is no strong interest binding between Qunchuang, Ruixuan and Vizio.
Another industry veteran believes that after the completion of this acquisition, Vizio's OEM factory is expected to benefit more. In theory, Wal Mart will increase the number of Vizio launched, otherwise it will be meaningless to buy Vizio. From a product perspective, Vizio prioritizes performance over ONN and will increase sales more. At this stage, Vizio's OEM factory will benefit as it involves factors such as appearance molds.
"In the long run, supplier integration is a key step after mergers and acquisitions." The industry veteran said that Wal Mart is expected to combine its original suppliers and Vizio's suppliers for bidding in the future supply chain selection of new TV products, so as to achieve integration benefits.
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