While the Korean mega-giant has already made its mark on the hardware front, Samsung is now looking to aggressively further its push into connected mobility segment. Thus, the company has today announced that it will acquire one of the prominent audio tech company’s Harman in an all-cash transaction, valued at $8 billion. This deal, expected to close by mid-2017, instantly makes Samsung a major player in the connected audio product segment.
For those unaware, Harman is widely known to everyone for its electronic products and audio accessories which it markets under various brands, including JBL, Infinity, Mark Levinson, Harman/Kardon, among others. But that’s not all. The company is the largest connected car and infotainment system manufacturer, including contracts with General Motors and Fiat-Chrysler.
More than 30 million vehicles have been equipped with Harmen’s connected car and audio systems, including infotainment, telematics, connected safety, and security. The growth of automotive products amounts to approximately 65 percent of the total $7 billion reported sales during the past year.
Commenting on the acquisition deal, Oh-Hyun Kwon, Vice Chairman and CEO of Samsung Electronics says,
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. 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.
Though Samsung managed to create immense buzz on the smartphone front, it didn’t actually sell a whole lot of those due to the explosive Galaxy Note 7. The Korean giant tried to do some damage control but failed. It, thus, had to recall all smartphones and halt the production of its faulty devices. Thus, it is most likely looking to bolster its connected automotive ambitions and compete with likes of Google, Apple and even BlackBerry’s QNX with this acquisition.
Samsung has agreed to pay $112.00 per share in cash, which represents a hefty 28 percent premium based on Harman’s closing stock price of $87.65 on November 11. This premium transaction values the connected car and audio company at approx $8 billion. The Korean giant’s Automotive Electronics Business Team will now co-operate and work closely with Harman to create synergies and realize the full potential of this deal.
Dinesh Paliwal, HARMAN Chairman, President, and CEO, also aired his views regarding the acquisition:
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. This transaction will bring HARMAN and Samsung’s complementary strengths together to accelerate innovation in this space.
Upon the closure of this deal, Samsung has announced that Harman will continue to operate as a standalone subsidiary. The Korean giant currently hasn’t announced any modifications to Harman’s business but instead said that it will continue to be led by Dinesh Paliwal and his management team. It also hasn’t booted any of its consumer and professional audio brands.
The Korean giant plans to expedite Harman’s leadership in new connected car technologies coupled with its own experience in connectivity technologies, including 5G, UX/UI, display technology and security solutions. The company also plans to its expertise in audio technologies to better its virtual reality and wearable products experience. Samsung believes there is also scope for building enhanced IoT (Internet of Things) connected products in partnership with Harmen. It will employ their 8,000 software designers and engineers to “deliver the next generation of cloud-based consumer and enterprise experiences.”
Samsung has recently been creating buzz around its brand by making headlines through more-than-impressive acquisitions. The Korean behemoth had recently picked up the next-gen AI platform Viv, developed by the creators of Siri. It plans to further develop and integrate this robust, self code-writing virtual assistant into its upcoming smartphone offering Galaxy S8.