Samsung Jumps Into Connected Car Race With Harman Acquisition

Deal

SAMSUNG ELECTRONICS has announced that it is buying audio and connected car electronics firm HARMAN INTERNATIONAL INDUSTRIES for $8 billion ($112.00 per share).  The deal gives SAMSUNG, troubled in recent months by manufacturing and design problems ("exploding") with its flagship GALAXY NOTE 7 phone and washing machines that prompted mass recalls, a strong position in the automotive infotainment and telematics categories; HARMAN, which owns the JBL, HARMAN KARDON, MARK LEVINSON, AKG, LEXICON, INFINITY, and REVEL audio brand and licenses BOWERS AND WILKINS and BANG AND OLUFSEN brands for automotive audio, reported sales of $7 billion in the 12 months ended SEPTEMBER 30th, 65% of which was automotive-related.  HARMAN will operate as a stand-alone SAMSUNG subsidiary.

“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 ELECTRONICS Vice Chairman and CEO OH-HYUN KWON.  “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. DINESH PALIWAL is a proven global leader and, in our extensive discussions, we have developed deep respect for him, his strong senior leadership team and HARMAN’s talented employees.  HARMAN’s sustained track record of rapid growth fueled by technology leadership and an unmatched automotive order pipeline reflects its commitment to innovation and customers.”

“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,” added SAMSUNG Pres./Chief Strategy Officer YOUNG SOHN. “We see substantial long-term growth opportunities in the auto technology market as demand for SAMSUNG’s specialized 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.”

HARMAN Chairman/President/CEO DINESH PALIWAL, who will remain in charge of HARMAN as a SAMSUNG subsidiary, said, “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.  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. More broadly, this investment underscores the strength of HARMAN’s employees, as well as our success and leadership across our markets.  We look forward to working together with SAMSUNG to elevate experiences for consumers worldwide.”

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