Samsung Electronics has long been on the move to branch out from its mobile products division. With declining revenues for its smartphones and problems with lithium-ion batteries overheating in some of its latest products, the company has been moving in a direction that will expand its reach in the electronics market.
The Korean electronics giant took another step toward that goal with the planned acquisition of Harman International Industries, Inc., a maker of connected car and audio systems such as embedded telematics, connected safety and security products. The $8 billion acquisition ($112 per share in cash) will create significant growth opportunities for Samsung, the company says, as Harman currently has long-term deals with most of the world’s largest automakers.
Harman’s connected car solutions will be added to Samsung’s branded products to create an end-to-end connectivity solution for automotive and consumer electronics applications. Source: Harman Samsung says that Harman’s products are currently in more than 30 million vehicles, and about 65% of its $7 billion sales during the last 12 months of reported sales came from the automotive market. Samsung will pair the connected car options and audio systems with its own brands of mobility, semiconductors, displays and more.
“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,” says Young Sohn, president and chief strategy officer of Samsung Electronics. The company believes that by combining Samsung’s own proprietary products, Harman can become a new kind of Tier 1 provider to OEMs by delivering end-to-end solutions across the connected ecosystem.
The transaction is pending regulatory approval. Once completed, Harman will operate as a standalone Samsung subsidiary, and Dinesh Paliwal will continue to lead Harman’s management team. Samsung says it will retain Harman’s workforce, headquarters and facilities in the automotive branch as well as its consumer and professional audio brand. Samsung expects the acquisition to close in mid-2017.
