Samsung is making a major push into the in-car electronics game with the acquisition of Harman [NYSE:HAR] in a deal worth $8 billion.
The Korean electronics giant will pay $112.00 per Harman share, which represents a premium of 28 percent on Friday’s closing price. The deal is still subject to regulatory approval and is only expected to close in mid-2017.
Upon closing, Harman will operate as a standalone Samsung subsidiary and continue to be led by current CEO Dinesh Paliwal. A special automotive electronics unit established at Samsung in 2015 will work closely with Harman to identify new opportunities for the joint companies.
CHECK OUT: VW admits Audi transmission distorts emissions during tests
Revel premium audio system
Samsung is hoping to combine its knowhow in connectivity, semiconductors, display technology and user interface design with Harman’s leadership in infotainment, telematics and car audio systems. For example, Harman’s diverse range of speaker brands, which includes JBL, Harman Kardon, Mark Levinson, Lexicon, Revel, Bowers & Wilkins (automotive only) and Bang & Olufsen (automotive only), will be able to benefit from Samsung’s mobile and display technologies to provide an enhanced product experience for customers.
ALSO SEE: BMW M2: Motor Authority's Best Car to Buy 2017
Crucially, the deal provides Samsung, which is still reeling from its massive recall of Galaxy Note 7 smartphones due to fire risk, with an immediate—and substantial—presence in the large and rapidly growing market for in-car electronics, which is predicted to grow to more than $100 billion by 2025. The company had previously been linked with Fiat Chrysler Automobiles’ [NYSE:FCAU] Magneti Marelli over a sale or partnership.
“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,” Samsung Electronics CEO Oh-Hyun Kwon said in a statement. “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.”
