Samsung to buy car tech firm
Harman for $8 billion, South Korea's biggest overseas
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[November 14, 2016]
By Hyunjoo Jin and Miyoung Kim
(Reuters) - Samsung Electronics announced an $8 billion deal on Monday
to buy Harman International Industries, marking a major push into the
auto electronics market and the biggest overseas acquisition ever by a
South Korean firm.
The electronics giant previously shunned big acquisitions, and the
latest deal underscores a strategic shift as the company tries to break
into the high-barrier automotive industry where it has little track
"An M&A deal this big is a first for us. But it shows that under Jay Y.
Lee, the company is changing and open to new ways to grow," a source
familiar with the deal told Reuters, referring to Samsung Electronics'
The purchase of the Stamford, Connecticut-based maker of connected car
and audio systems is part of Samsung's efforts to find new areas of
growth as its mainstay smartphone business - scarred by the disastrous
withdrawal of the fire-prone Galaxy Note 7 - slows.
Automakers already include or are developing technologies to enhance
safety and provide better smartphone connectivity and entertainment
systems, creating an opening for tech companies to break into a market
for software, services and components.
Samsung agreed to acquire Harman for $112.00 per share in cash, a 28
percent premium to the U.S. firm's closing price on Friday.
"Samsung is using its huge cash pile to pull ahead of rivals in the auto
technology market. But it remains to be seen whether Harman will be able
to grow into a company that will be able to compete with the likes of
Bosch and Continental," said HDC Asset Management fund manager Park
Harman's products, which provide infotainment, telematics, connected
safety and security services, are used in more than 30 million vehicles
made by automakers such as BMW, Toyota Motor Corp and Volkswagen <VOWG_p.DE>,
according to its website.
Harman, the maker of JBL audio system, earns around two thirds of its
revenue from the automotive-related segment, and its automotive order
backlog as of end-June stood at $24 billion, more than three times
annual sales of $6.9 billion in fiscal year 2016.
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The logo of Samsung Electronic is seen at its headquarters in Seoul,
South Korea, July 4, 2016. Picture taken on July 4, 2016.
REUTERS/Kim Hong-Ji/File Photo
Samsung created an automotive electronics business team a year ago to
identify growth opportunities in the sector. This year it invested $450
million in Chinese automaker and rechargeable batteries firm BYD Co Ltd.
Separately, Samsung has held talks with Fiat Chrysler Automobiles (FCA)
over a potential sale or partnership for the latter's Magneti Marelli
auto parts maker, sources have said. The current status of those talks
The Harman acquisition is subject to regulatory approvals and is
expected to close in mid-2017.
The deal was announced a day after media reports said Lee and several
other heads of South Korea's family-owned conglomerates were questioned
by prosecutors investigating a political scandal engulfing South Korean
President Park Geun-hye.
(Reporting by Hyunjoo Jin and Miyoung Kim; Editing by Edwina Gibbs and
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