The South Korean consumer electronics giants is keen to grab a piece of the connected car market, which it expects to be worth US$100 billion by the year 2025. Its all-cash acquisition of HARMAN is aimed to accelerated its growth in automotive and connected technologies.
In case you’re wondering, HARMAN is the parent company of brands like Mark Levinson, Revel, Infinity, JBL, Harman/Kardon and Lexicon , apart from being licensees for Bowers & Wilkins and Band & Olufsen automotive products. HARMAN’s automotive partners include Rolls Royce, Bentley, BMW, Mercedes-Benz, Ferrari, Porsche and Jaguar/Land Rover… so it’s easy to see where Samsung’s play is directed.
We reproduce, in parts, the press announcement:
Samsung Electronics and Harman International Industries have entered into a definitive agreement under which Samsung will acquire HARMAN for approximately US$8 billion. Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung, and is expected to grow to more than US$100 billion by 2025.
HARMAN is the market leader in connected car solutions, with 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 US$7 billion of reported sales during the 12 months ended Sept 30, 2016 are automotive-related, and its order backlog for this market at June 30, 2016 was approximately US$24 billion.
HARMAN’s experience designing and integrating sophisticated 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. In addition, 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.
“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 recognised portfolio of best-in-class products, HARMAN immediately establishes a strong foundation for Samsung to grow our automotive platform.”
HARMAN will operate as a standalone Samsung subsidiary, and continue to be led by Dinesh Paliwal and HARMAN’s current management team. Samsung is pursuing a long-term growth strategy in automotive electronics, and 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 both companies.
Paliwal added: “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.
“Samsung is an ideal partner for HARMAN and this transaction will provide tremendous benefits to our automotive customers and consumers around the world. Combining Samsung’s strengths in leading-edge displays, connectivity and processing solutions with HARMAN’s technology leadership and long-standing customer relationships will enable OEMs to provide new offerings for their customers. Partnerships and scale are essential to winning over the long term in automotive as demand for robust connected car and autonomous driving solutions increases at a rapid pace.
“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.”
How this deal will impact the hi-fi division of HARMAN, we’ll just have to wait and see…