Vizio Inc. cofounder and Chief Executive William Wang will retain control of the brand under a plan to take the TV titan public.
Vizio is seeking to raise as much as $172.5 million in an initial public offering, according to a registration statement filed July 24 with the Securities and Exchange Commission.
The exact number of shares and the price range for the offering have not been determined.
Wang owns 54.7% of the Irvine-based consumer electronics brand—good for about 11 million shares, according to the filing. He’s expected to retain control through 10.8 million shares of Class B common stock that would be vested with approximately 95% of the voting power in the company.
The plan also calls for him to nominate a majority of the company’s board under the proposed corporate structure, regulatory filings disclosed.
Class A Shares
Another 242,500 shares held by Wang would convert to Class A shares of common stock that entitle holders to one vote per share.
Existing Vizio shareholders—a mix of early employees, executives and manufacturers—would swap their stock in the privately held company for Class A shares once it went public.
New investors would receive Class A shares in the offering.
Wang founded Vizio in 2002 and has built it into a perennial leader in sales of flat-screen TVs and accessories in North America. It’s now the seventh largest privately held company based in Orange County and the primary source of fortune that lands him on the OC’s Wealthiest list, the centerpiece of this issue of the Business Journal (see special section pullout; related stories throughout).
Vizio, which launched with little fanfare, entered this year as the No. 1-ranked seller of soundbars and the No. 2 seller of smart, high-definition TVs in the U.S., with sales of $3.1 billion last year.
TVs accounted for 94% of its revenue last year, according to the filing.
Perennial rival Samsung topped the U.S. leader board in TV sales, according to Port Washington, N.Y.-based NPD Group Inc.
Wang has kept within striking distance of his South Korea-based competitor with some big partners. Vizio’s largest minority owners are Taiwan-based Amtran Technology Co., which controls 20.4% of common stock, and Q-Run Holdings Ltd., an affiliate of Taipei-based Hon Hai Precision Co. that holds an 8.3% stake.
Hon Hai, better known as FoxConn, is the world’s largest contract electronics manufacturer, with annual revenue of about $130 billion.
Amtran and Hon Hai accounted for 37% of Vizio’s inventory purchases last year, according to regulatory filings.
La Jolla-based V-TW Holdings LLC has a 7.7% stake in Vizio.
The company directed Business Journal inquiries to the filing.
Proceeds
Vizio said it plans to use the proceeds to boost operations, support global marketing and branding campaigns, and support efforts to expand product offerings and services. A portion of the funds might also be used for working capital and general corporate purposes, as well as for potential acquisitions or investments.
The company’s shares would trade under the symbol VZIO, according to the plan.
Vizio has linked quality design and deep connections with Asian suppliers, such as Foxconn/Hon Hai, Wistron, and TPV, with distribution agreements with the largest U.S. retailers, such as Wal-Mart, Best Buy, Target, Costco and Sam’s Club.
Indeed, Wal-Mart and Sam’s Club accounted for 52% of Vizio’s net sales last year, with Costco and Best Buy accounting for more than 20% combined.
Vizio’s products are carried in more than 8,000 U.S. retail outlets.
Financials disclosed in the filing show that Vizio has been profitable for the last nine years, posting net income of $44.9 million last year.
It has 407 workers companywide.
Vizio in regulatory documents signaled some potential new revenue streams based on its connected customer base and monetizing data on the viewing habits of Vizio TV owners.
Its Inscape Data Services product, for example, captures up to 100 billion daily anonymized viewing data points from the company’s base of more than 8 million connected TVs that “can be used to generate intelligent insights for advertisers and media content providers,” the company highlighted in the filing to potential investors.
The company’s discovery and engagement software, Vizio Internet Apps Plus, provides access to billions of hours of entertainment from traditional and streaming content providers such as Netflix, Hulu, YouTube and Amazon Instant Video.
Smart TVs
Vizio also believes it can position its line of smart TVs as a driver of mobile commerce, as more customers shop via Internet-connected TVs. U.S. consumers last year spent $58.1 billion on products and services using Internet-enabled mobile devices, such as tablets and smartphones, according to eMarketer.
TVs, long thought of as a maturing market, appear to have some room for growth, as well.
IHS Technology forecasts smart TV shipments in North America to grow from 15.6 million units in 2014 to 20.5 million units in 2019, a 5.6% compound annual growth rate. Smart TVs are expected to comprise an even greater percentage of North American shipments, rising from 35.8% in 2014 to 49.1% in 2019.
The growth could help Vizio tap into the booming video-on-demand market, which is expected to grow from $25.3 billion in 2014 to $61.4 billion in 2019, a 19.4% annual growth rate, according to Markets and Markets.
Vizio, which recently expanded into Canada and Mexico, could also make a bigger push in international markets, which generated $77.1 billion in high-definition TV sales last year, according to IHS Technology.
IPO Run
A Vizio IPO would follow a busy recent run of IPOs that came on the heels of years of inactivity in the wake of the Great Recession.
Costa Mesa-based real estate investment company Rich Uncles LLC filed an IPO last month to raise as much as $1 billion for its newly created Rich Uncles REIT Inc. Eye device maker Glaukos Corp. in Laguna Hills in late June raised $118 million in an IPO.
That same month, Del Taco Holdings Inc., which is based in Lake Forest, began trading under the symbol TACO on the Nasdaq Capital Market after merging with Chicago-based Levy Acquisition Corp.
Last year saw a handful of public exits that included Aliso Viejo-based homebuilder The New Home Co., El Pollo Loco Holdings Inc. in Costa Mesa, and a quartet of Irvine-based companies: Habit Restaurants Inc.; financial services company First Foundation Inc.; apparel chain Boot Barn Holdings Inc.; and Opus Bank.
In February, the Business Journal first reported that Vizio might be mulling an IPO when it listed a job opening in its legal department seeking an attorney with “pre-IPO” experience, as well as drafting SEC filings, including registration statements, periodic reports, proxy statements and Section 16 reports.
