Samsung Electronics and Harman International have announced a definite agreement under which Samsung will acquire Harman for US$112 per share in cash with a total equity value of US$8 billion. The purchase price represents a premium of 28% based on Harman’s closing stock price on November 11, 2016. The deal will give Samsung a significant presence in the realm of connected technologies, particularly automotive electronics. Approximately 65% of Harman’s US$7.0 billion of reported sales during the
Harman will continue to operate as a standalone Samsung subsidiary, and continue to be led by Dinesh Paliwal and Harman’s current management team. Samsung also plans to retain Harman’s work force, headquarters and facilities, as well as all of its consumer and professional audio brands. Samsung’s Automotive Electronics Business Team, which was established in December of 2015 to identify opportunities for Samsung in the automotive sector, will work closely with the HARMAN management team to realize the full growth potential of the combination.
Samsung has made the strategic move as it predicts the automotive electronics market to grow to more than US$100 billion by 2025. Harman’s experience designing and integrating in-vehicle technologies, as well as its long-term relationships with most of the world’s largest automakers, is expected to create significant growth opportunities for the combined business. The move will also enable Harman to leverage Samsung’s expertise in connected mobility, semiconductors, user experience, displays and its global distribution channels.
Young Sohn, president and chief strategy officer of Samsung Electronics, said: “The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade. We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialised 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.â€
Dinesh Paliwal, Harman chairman, president and CEO, stated: “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.â€