Samsung to acquire Harman
WORLD: Samsung Electronics has entered into a definitive agreement to acquire Harman International Industries for US$112 per share in cash, a total equity value of approximately US$8 billion. The move has been driven by Harman’s presence in the automotive and consumer sectors, yet will also have a significant impact on the pro audio market.
The automotive sector accounts for approximately 65 per cent of Harman’s US$7 billion of reported sales. Samsung made this sector a strategic priority and believes that the combined strengths of the companies makes for a compelling proposition. The companies believe that Harman’s experience designing and integrating in-vehicle technologies, as well as its long-term relationships with most of the world’s largest automakers, will 'create significant growth opportunities' for the combined business by enabling it to leverage Samsung’s expertise in connected mobility, semiconductors, user experience, displays and its global distribution channels.
‘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. ‘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.’
While the automotive market is the major factor in the deal, there are also other sectors which the combined companies will look to target. The organisations believe that the combination of Harman’s brands and audio capabilities and Samsung’s expertise in consumer electronics will deliver ‘enhanced customer benefits’ and ‘elevate user experiences’ across Samsung’s complete portfolio of consumer and professional products and systems.
Specifically in the professional A/V market the deal is expected to expand the combined company’s business-to-business platform through its ability to deliver integrated, large-scale audio and visual professional solutions at stadiums, concert facilities and other performance centres.
‘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. Today’s announcement is a testament to what we have achieved and the value that we have created for shareholders,’ said Dinesh Paliwal, Harman chairman, president and CEO. ‘This transaction will bring Harman and Samsung’s complementary strengths together to accelerate innovation in this space. More broadly, 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.’
When the deal closes, Harman will operate as a standalone Samsung subsidiary, and continue to be led by Dinesh Paliwal and its current management team. Samsung plans to retain Harman’s work force, headquarters and facilities, as well as all of its consumer and professional audio brands. Samsung believes the combination will increase career development and advancement opportunities for the employees of the combined companies.
The transaction, which is subject to approval by Harman shareholders, regulatory approvals and other customary closing conditions, is expected to close in mid-2017.