Samsung is to acquire US audio and automotive accessories manufacturer Harman International Industries in an all-cash deal worth $8 billion (€7.43 billion), the largest acquisition in the firm’s history,
The transaction, subject to approval by Harman shareholders, will expand Samsung’s presence in the connected car market. Samsung will gain access to 8,000 Harman software designers and engineers.
The deal brings together Harman’s expertise in connected car technologies, including infotainment, cyber security, over-the-air updates and telematics, with Samsung’s experience with 5G, UX/UI, display technology and security solutions, the Korean maker said.
Harman will operate as a standalone subsidiary, headed by its existing management team. Samsung will retain the company’s workforce, headquarters and facilities. It will also retain its various audio brands, including JBL, Harman Kardon, Mark Levinson, AKG, Lexicon, Infinity, and Revel.
Its own automotive unit, established late last year, will work closely with the Harman team, to deliver “the next generation of cloud-based consumer and enterprise experiences” for the connected car market.
Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer at Samsung Electronics, said: “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.”
Young Sohn, President and Chief Strategy Officer of Samsung Electronic, said: “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.”
He added: “We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialised electronic components and solutions continues to grow.”
Dinesh Paliwal, Chairman, President and CEO at Harman, said: “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.”
The automotive sector contributed around two thirds of Harman’s $7 billion sales during the past 12 months. The firm has around $24 billion in back-orders for its connected car solutions, Samsung said.
The deal is expected to close in mid-2017, subject to shareholder and regulatory approval.
By 2020, almost half of vehicles on the road will be connected, according to recent research. Almost three quarters of consumers with an infotainment system in their car are willing to pay for software upgrades to improve functionality.