Samsung to acquire Harman International in $8bn deal

BY Richard Summerfield

Samsung Electronics announced on Monday that it had agreed to acquire Harman International Industries in a deal worth $8bn.

Under the terms of the deal, Samsung will pay around $112 per Harman share held. All together, the company will be paying a premium of 28 percent on Harman's closing price on Friday 11 November, the last day of trading before the deal was announced. The two companies expect the transaction to close in mid 2017, though the deal is still subject to regulatory approval.

For beleaguered Samsung, still reeling from the damage done to its mobile phone business following the withdrawal of the fire-prone Galaxy Note 7, the company’s commitment to the connected automotive sector may come as welcome relief. The automotive space is an increasingly popular investment destination for tech firms, and with industry giants Google and Apple both increasing their interest and presence in the industry in recent years, Samsung’s deal for Harman may prove a prudent investment.

Harman's products, which provide infotainment, telematics and connected safety and security services, are used in more than 30 million vehicles made by some of the world’s biggest car manufacturers, including BMW, Toyota and Volkswagen.

“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 of Samsung, in a statement. “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.”

Samsung’s movement into the automotive space has developed over the last 12 months. Following the creation of the division in 2015, the company has invested $450m in Chinese car manufacturer and rechargeable batteries firm BYD Co Ltd. It has also held negotiations with Fiat Chrysler Automobiles over the potential sale or partnership of its Magneti Marelli manufacturing unit.

Harman will, according to Samsung, continue to operate as a standalone Samsung subsidiary, with its chief executive Dinesh Paliwal continuing to lead the division.

News: Samsung to buy car tech firm Harman for $8 billion, South Korea's biggest overseas deal

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