Connected Car, Acquisition of Audio Specialist Harman
Full-scale advancement of the battlefield business, a new growth area, and securing a foundation for global advancement.

Samsung Electronics is acquiring Harman, a U.S. automotive electronics company, to accelerate its automotive electronics business, a new growth area, and strengthen its audio business.

Samsung Electronics announced on the 14th that its board of directors approved the acquisition of Harman, a company specializing in connected cars and audio. The acquisition price is $112 per share, for a total acquisition value of $8 billion (KRW 9.4 trillion). This is the largest M&A ever between a domestic company and a foreign company.

Through this acquisition of Harman, Samsung Electronics has laid the foundation to become a global leader in the connected car electrical components market, which is growing at an average annual rate of 9%.

The market for Harman's electric vehicle business, including connected cars, car audio, and services, is expected to grow from $45 billion last year to approximately $100 billion in 2025.

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Samsung Electronics has been preparing for its automotive electronics business, focusing on semiconductors and displays. However, with the acquisition of Harman, a global leader in infotainment and telematics, the company is expected to leap forward as a total solutions company in the automotive electronics business.

As automobiles become more intelligent, networked, and autonomous driving capabilities are enhanced, automakers are making significant efforts to meet the diverse needs of consumers, including personalized services, various tasks, and entertainment.

Samsung Electronics is able to bring innovative products to market more quickly by combining its consumer understanding of components and UX technologies, including 5G communications, OLED, artificial intelligence (AI), and voice recognition, with Harman's automotive electronics expertise, built on its mobile and CE divisions.

Through this, automakers are expected to be able to provide consumers with a next-level user experience. Furthermore, Samsung Electronics plans to enhance consumer satisfaction by applying Harman's audio technology and premium brand to various products, including TVs and smartphones, where it maintains its global leadership, as well as VR and wearables. Furthermore, Samsung Electronics plans to strengthen synergies between its large display business and Harman's audio and lighting equipment businesses for concert halls and theaters.

Samsung Electronics Vice Chairman Kwon Oh-hyun said, "We will lead a new platform in the connected car sector by combining Harman's know-how in the electric vehicle business and its extensive customer network with Samsung's IT, mobile technology, and components business capabilities."

“With the rapid expansion of IT into the automotive sector, it has become increasingly important to partner with companies that possess both superior technology and a broad range of business areas,” said Dinesh Paliwal, Harman’s CEO. “We hope that this acquisition will enable us to provide customers with more innovative and differentiated experiences.”

Samsung Electronics said it plans to complete the acquisition by the third quarter of 2017, subject to approval from Harman's shareholders and key government agencies, but that the deal could be brought forward if approval is received earlier.

Harman will continue to be operated by its current management as a subsidiary of Samsung Electronics after the acquisition. Samsung Electronics plans to actively expand its automotive electronics business, a new growth area, by working closely with Harman management, centered around its automotive electronics business team.

What kind of company is Harman?
A leading company in the automotive sector, including infotainment and telematics.

Harman is a global leader in automotive electronics, including infotainment, telematics, security, and over-the-air (OTA) solutions for connected cars. With revenue of $7 billion and operating profit of $700 million (based on the trailing 12 months), 65% of its revenue comes from the automotive electronics business. Harman's connected car and car audio businesses, in particular, boast a $24 billion order backlog, approximately six times its annual sales, demonstrating its competitiveness in the automotive electronics industry.

Harman holds the top spot (24%) in premium infotainment, second place (10%) in overall infotainment, and second place (10%) in telematics. Harman also owns premium audio brands such as JBL, Harman Kardon, Mark Levinson, and AKG. In car audio, it also owns brands such as Bang & Olufsen (B&O) and Bowers & Wilkins (B&W), holding a global market share of 41%, making it the leading company.