Home > World > Samsung to Acquire U.S. Car Tech Firm for $8 billion
World

Samsung to Acquire U.S. Car Tech Firm for $8 billion

By November 16, 2016 at 12:07 pm
Renault-Samsung

Samsung Electronics has agreed to acquire Harman International Industries in an $8 billion deal-the biggest overseas acquisition a South Korean company will have ever made in history. The South Korean firm previously avoided big acquisitions, and this latest deal marks the company's strategic push into the auto electronics market where it has little track record.

"An M&A deal this big is a first for us. But it shows that under Jay Y. Lee, the company is changing and open to new ways to grow," a source who knows about the deal said, referring to Samsung's Vice Chairman.

Samsung's acquisition of the Connecticut-based manufacturer of connected car and audio systems is part of its efforts to find new areas of growth as its smartphone business slows down due to the global withdrawal of the Galaxy Note 7.

Samsung agreed to buy Harman for $112.00 per share in cash, a 28% premium to Harman's closing price on Friday.

"Samsung is using its huge cash pile to pull ahead of rivals in the auto technology market," said Park Jung-hoo, fund manager of HDC Asset Management. "But it remains to be seen whether Harman will be able to grow into a company that will be able to compete with the likes of Bosch and Continental."

Automakers already have or are working on technologies that will enhance safety and offer better smartphone connectivity as well as entertainment systems, allowing tech firms to break into a market for components, software and services.

Samsung came up with an automotive electronics business team in 2015 to identify growth opportunities in the sector. This year, the tech giant invested $450 million in BYD Co Ltd., a Chinese automaker and rechargeable batteries firm.

The purchase of Harman is still subject to regulatory approvals and is anticipated to close in mid-2017.

The deal was announced on Monday, just a day after news of Lee and several other heads of South Korea's family-owned conglomerates were interrogated by prosecutors in an investigation about the political scandal surrounding South Korean President Park Geun-hye.

Like Us on Facebook