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Samsung to buy IIT alumnus-led connected car systems firm Harman

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For-Samsung-Story-TC_20161114_AK_Samsung-Phone-01South Korean electronics giant Samsung Electronics Co. Ltd said it would buy US auto-suppliers firm Harman International Industries, which owns brands such as JBL, Harman Kardon and AKG, for $8 billion in an all-cash deal.

Harman offers connected car solutions and currently more than 30 million vehicles are equipped with its car and audio systems, including embedded infotainment, telematics, connected safety and security.

With this transaction, Samsung will get a significant presence in the large and rapidly growing market of connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung.

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The chairman and chief executive of Harman International is Dinesh Paliwal, an Indian Institute of Technology Roorkee alumnus.

"They have entered into a definitive agreement under which Samsung will acquire Harman for $112.00 per share in cash, or a total equity value of approximately $8 billion," Samsung said in an official blog dated November 14.

Paliwal, who was born in Agra in Uttar Pradesh, holds a master's in chemical engineering from IIT Roorkee and an MBA from Miami University in the US.

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Nearly 65% of Harman's $7 billion of reported sales during the 12 months ended 30 September 2016 is automotive-related. Its order backlog for this market as of 30 June 2016, was around $24 billion.

"Harman 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 chief executive officer of Samsung Electronics.

"Harman's track record of rapid growth fueled by technology leadership and an unmatched automotive order pipeline reflects its commitment to innovation and customers," Kwon said.

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The South Korean behemoth will gain access to Harman's 8,000 software designers and engineers who are unlocking the potential of the Internet of Things (IoT) market.

"Combining Samsung's strengths in leading-edge displays, connectivity and processing solutions with Harman's technology leadership and long-standing customer relationships will enable original equipment manufacturers (OEMs) to provide new offerings for their customers," Paliwal said in the blog.

The buyout price represents a premium of 28% based on Harman's closing stock price on November 11, 2016 and a 37% premium to Harman's 30-calendar day volume weighted average price ended 11 November 2016.

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Samsung said the agreement has been unanimously approved by the boards of both companies.

The transaction, which is subject to approval by shareholders of Harman, is expected to close in the middle of next calendar year.

Besides JBL, Harman Kardon and AKG, Harman's leading brands and audio systems include Mark Levinson, Lexicon, Infinity and Revel.

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Last year, Harman had slapped a legal notice on India's ShopClues to check the issue of fake products of the US-based firm being sold on the online marketplace.


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