Stamford, Connecticut – Samsung Electronics is buying automotive electronics company Harman International Industries Inc. for about $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 $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 $7 billion of reported sales during the 12 months ended September 30, 2016, are automotive-related, and its order backlog for this market at June 30, 2016 was approximately $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.
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,” says 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. 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.”
Dinesh Paliwal, Harman chairman, president, and CEO, states, “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 expects the combination to deliver significant growth opportunities and benefits to customers by leveraging Samsung’s and Harman’s complementary technologies.
- Automotive: Combining Harman’s leadership in new connected car technologies, including its top positions in infotainment, cyber security, over-the-air updates, and telematics, with Samsung’s significant expertise and experience in connectivity technologies, including 5G, UX/UI, display technology, and security solutions, will drive greater sales and provide significant benefits as automakers speed the adoption of next-generation connected cars.
- Audio: Harman’s brands and cutting-edge audio systems include JBL, Harman Kardon, Mark Levinson, AKG, Lexicon, Infinity, and Revel. The company also licenses Bowers & Wilkins, and Bang & Olufsen brands for automotive. All of these brands will greatly enhance the competitiveness of Samsung’s mobile, display, virtual reality, and wearable products to deliver a fully differentiated audio and visual experience for customers.
- Connected Services: Samsung will gain access to Harman’s 8,000 software designers and engineers who are unlocking the potential of the IoT market. This collaboration will deliver the next generation of cloud-based consumer and enterprise experiences, as well as end-to-end services for the automotive market through the convergence of design, data and devices.
Upon closing, Harman will operate as a standalone Samsung subsidiary, and continue to be led by Dinesh Paliwal.
Source: Harman International Industries Inc.