Samsung to acquire connected car firm Harman for $8 billion
Mon 14 Nov 2016
Samsung has announced its plans to buy car tech company Harman International for $8 billion (approx. £6.4 billion), marking the largest ever overseas deal by a South Korean firm.
The electronics giant is to purchase the connected car systems company in a push to strengthen its efforts in emerging areas as its smartphone business slows, hurt by the recent PR disaster and worldwide recall of the explosive Galaxy Note 7.
‘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 Samsung CEO Oh-Hyun Kwon in an official press release.
Samsung confirmed that it will acquire the Connecticut-based company for $112 per share in cash, representing a premium of 28% based on Harman’s closing stock price on 11th November.
Harman’s solutions include infotainment systems, telematics products, and connected safety and security features. The services are deployed in over 30 million vehicles worldwide, including in models from auto giants such as BMW, Toyota, and Volkswagen.
The company, which employs around 30,000 people, is expected to operate as a standalone Samsung subsidiary and will continue to run with its current CEO Dinesh Paliwal at the helm.
‘Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung,’ the release continued.
The South Korean firm established an automotive systems branch last year to focus on growth opportunities in the field. Earlier in 2016, it invested $455 million in Chinese car maker and rechargeable batteries specialist BYD.
Samsung is also thought to be in conversation with Fiat Chrysler Automobiles (FCA) around strategic partnerships for the car producer’s parts maker Magneti Marelli.
The Samsung Harman deal remains subject to Harman shareholder and regulatory approvals, as well as further ‘customary’ conditions. It is expected to close in mid-2017.