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Samsung Gets Auto Exposure With $8 Billion Harman Acquisition

Monday, November 14, 2016 5:17
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Automotive components maker Harman International Industries Inc (NYSE:HAR) will be acquired by Korean electionics giant Samsung for $8 billion, the two companies said today.

The $112 per share all-cash deal represents a nearly 28% premium over HAR’s Friday closing price of $87.65. The takeover is expected to be completed by mid-2017.

Samsung, which is best known for its smartphones, TVs, and other consumer electronics, has been looking to expand its presence in the connected devices market recently. Harman will give the company an instant footprint in that market, with a particular emphasis in the automotive electronics area.

Harman is a global leader in the auto electronics world, with over 30 million vehicles currently equipped with its connected car and audio systems. Those components include embedded infotainment, telematics, connected safety, and security systems.

HAR boasts $7 billion in annual sales, with about 65% of those revenues derived from auto-related components. The company’s order backlog for automotive components sat at $24 billion by the end of June this year.

The companies commented via press release:

“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 Officer of Samsung Electronics. “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.”

Harman shares were inactive in premarket trading Monday. Prior to today’s M&A news, HAR had fallen 6.96% year-to-date, versus a 6.16% rise in the benchmark S&P 500 during the same period.

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