In an effort to expand into the auto market, Samsung has announced that it will purchase Harman for $8 billion to gain access to both its automotive and audio offerings.
The American company Harman is best known for its audio equipment, though it also has a large presence in the automotive market. Last year the company earned over $7 billion ,its connected car devices and audio systems which accounted for 65 per cent of its total sales.
Harman's products are installed in around 30 million vehicles worldwide which could really benefit Samsung as it has already lost a lot of ground to its two biggest competitors in the connected car market, Apple and Google.
Vice Chairman and Chief Executive Officer of Samsung Electronics, Oh-Hyun Kwon, released a statement regarding the deal, saying: “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.”
Samsung has agreed to pay Harman $112.00 per share which is well over its current share price of $87.65 for a total of $8 billion for the company. Overall the Korean company will pay $8 billion to acquire Harman which will become a standalone subsidiary of Samsung when the deal closes in mid-2017.
Dinesh Paliwal, Harman's current CEO, Chairman and President, will continue to fill those roles after the company is acquired by Samsung and becomes a subsidiary. Paliwal also offered his thoughts on the deal, saying: “Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers and consumers around the world.”
Samsung also plans to utilise Harman's 8,000 developers to further its internet of things (IoT) offerings and to “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.”
Image Credit: JPstock / Shutterstock