14 DAY TRIAL // Samsung has just announced it has reached an agreement with automotive and audio giant Harman for the acquisition of the company's total number of shares for $112 per share in cash, or total equity value of approximately $8 billion.
The South Korean company paid 28% premium over Harman's current share price, but the automotive/audio company has a projected backlog of $24 billion.
As many of you probably know, Harman has a strong presence in the audio and smartphone markets thanks to products like Harman Kardon, Bang & Olufsen, dbx and JBL, but few probably know that about two-thirds of the company's sales come from its automotive business.
Harman is one of the leaders in the connected devices for the automotive industry, as the company is one of the main suppliers for infotainments, telematics, connected safety and security devices and services, which are currently used in many cars manufactured by Volkswagen, Toyota and BMW.
Samsung has been trying to enter the automotive market for quite some time now, but has decided that a strong presence in this business will require a lot of time and resources. The acquisition of Harman will enable Samsung to enter this business directly on one of the top positions.
Samsung will maintain Harman's employees, headquarters and facilities
According to the official statement, through the recent acquisition of the automotive/audio giant, Samsung will gain access to Harman's more than 8,000 software designers and engineers who are very experienced in the IoT market.
Samsung also announced that, upon closing, Harman would operate as a standalone Samsung subsidiary, and it will maintain its leadership.
The South Korean company also states that it's now pursuing a long-term growth strategy in automotive electronics, so it has decided to keep all Harman's employees, headquarters and facilities, and it will not drop any of its consumer and professional audio brands.
The transaction announced today is subject to approval by Harman shareholders and regulatory approvals, and it's expected to close in mid-2017.