Published: Wed, November 23, 2016
Economy | By Melissa Porter

Samsung Electronics buys auto-systems maker Harman for $8B

The deal, which is being pegged as the largest overseas acquisition ever by a South Korean firm, will see Samsung pay Dollars 112 per share in cash (total equity value of about USD 8 billion).

Samsung Electronics has agreed to buy United States automotive parts maker Harman International Industries for $8bn cash as part of a strategic swoop into the fast-growing "connected car" market.

The company is making its largest-ever overseas acquisition with an offer for Harman International Industries Inc., angling to become the go-to supplier of everything from in-car entertainment to connected-auto services. The company's annual sales in the year ending September 2016 were $7 billion, only a $1 billion less than Samsung's agreed purchase price.

Over 30 million vehicles use its embedded infotainment, telematics, safety, and security solutions, the firm said in its joint statement with Samsung.

The deal must first be approved by Harman shareholders and regulatory agencies, but is expected to be finalized by mid-2017.

The electronics company will buy Harman for $112 per share and is the company's biggest acquisition to date.

Harman will act as a Samsung subsidary, retaining its current management team. Harman now generates 65 percent of its sales from this sector. "[This acquisition] immediately establishes a strong foundation for Samsung to grow our automotive platform".

"Combining Samsung's strengths in leading-edge displays, connectivity and processing solutions with Harman's technology leadership and long-standing customer relationships will enable OEMs to provide new offerings for their customers", said Dinesh Paliwal, Harman Chairman, President and CEO.

Started as a specialist in hi-fi audio products, Harman also owns stereo equipment brands such as JBL, Kardon, Infinity and Revel. Likewise, Samsung plans to keep HARMAN's work force, headquarters, and facilities.

Like this: