Samsung buys Harman to expand IoT, connected cars footprint
Samsung yesterday announced it will acquire audio giant Harman for $112.00 per share in cash, or total equity value of approximately $8.0 billion. Samsung is using Harman as a platform to expand its presence in the large and rapidly growing market of IoT connected cars, an industry that is expected to grow to more than $100 billion by 2025.
“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,” said Young Sohn, president and chief strategy officer of Samsung Electronics. “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 has more than 30 million vehicles currently equipped with its connected car and audio systems, including embedded infotainment, telematics, connected safety and security. Approximately 65% of Harman’s $7.0 billion of reported sales during the last six months are automotive-related, and its order backlog in June was approximately $24 billion.
“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,” said Dinesh Paliwal, Harman chairman, president and CEO. “Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers and consumers around the world. 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.”
Samsung believes a combination of Harman connected car expertise and Samsung’s presence in mobility, semiconductors, user experience, displays and distribution will allow the company to become a key player in connected cars. Samsung will also be gaining Harman’s well-known brands (JBL, Harman Kardon, AKG) in the consumer audio space.
“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 CEO 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.”