Samsung has agreed to acquire Harman International Industries, a leader maker of connected products for automakers, for $112.00 per share in cash – a total equity value of approximately $8.0 billion.
The deal represents the largest overseas acquisition by a South Korean company to date.
At $112.00 per share, Samsung is agreeing to a pay 28 percent premium to the company’s closing price of $87.65 in New York on Friday.
Samsung has expressed interest in new growth opportunities – especially now given the slowdown in its smartphone business.
The Harman acquisition will allow Samsung to instantly tap into the connected automotive market and use its expertise to develop displays and cockpit electronics.
The South Korean tech giant said in a statement that the merger “will create significant growth opportunities for the combined business”, allowing it to “leverage Samsung’s expertise in connected mobility, semiconductors, user experience, displays and its global distribution channels.”
Approximately two thirds of of Harman’s $6.9 billion annual revenue comes from connected cars and the Stamford, Connecticut-based company’s automotive order backlog as of end-June stood at $24 billion.
Over 30 million vehicles currently have Harman connected car and audio systems, including embedded infotainment, telematics, connected safety and security. Its products are used by automakers such as BMW, Toyota Motor Corp and Volkswagen.
Harman markets its products under more than twenty brands, including AKG Acoustics, AMX, Crown Audio, Harman/Kardon, Infinity, JBL, JBL Professional, Lexicon, Mark Levinson, Martin, Revel, Soundcraft and Studer.
“HARMAN perfectly complements Samsung in terms of technologies, products and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time,” said Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer of Samsung Electronics.
“As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognized portfolio of best-in-class products, HARMAN immediately establishes a strong foundation for Samsung to grow our automotive platform. Dinesh Paliwal is a proven global leader and, in our extensive discussions, we have developed deep respect for him, his strong senior leadership team and HARMAN’s talented employees.
“HARMAN’s sustained track record of rapid growth fueled by technology leadership and an unmatched automotive order pipeline reflects its commitment to innovation and customers.”
Young Sohn, President and Chief Strategy Officer of Samsung Electronics, added:
“We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialized electronic components and solutions continues to grow. Working together, we are confident that HARMAN can become a new kind of Tier 1 provider to the OEMs by delivering end-to-end solutions across the connected ecosystem.”
Samsung is an ‘ideal’ partner for Harman and the deal will provide ‘tremendous’ benefits to customers and consumers across the world, said Harman Chairman, President and CEO Dinesh Paliwal.
Dinesh Paliwal stated: “This compelling all-cash transaction will deliver significant and immediate value to our shareholders and provide new opportunities for our employees as part of a larger, more diversified company.
“Today’s announcement is a testament to what we have achieved and the value that we have created for shareholders. Samsung is an ideal partner for HARMAN and this transaction will provide tremendous benefits to our automotive customers and consumers around the world.
“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.
“Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace. This transaction will bring HARMAN and Samsung’s complementary strengths together to accelerate innovation in this space. More broadly, this investment underscores the strength of HARMAN’s employees, as well as our success and leadership across our markets. We look forward to working together with Samsung to elevate experiences for consumers worldwide.”
