Harman Acquisition Completed by Samsung Electronics

Following all conditions being met, the acquisition of Harman International by Samsung Electronics has been completed for $112.00 per share in cash. The conditions that had to be met included approval by Harman stockholders and regulatory approvals.

The acquisition brings together Harman’s audio brands and Samsung’s display technologies and together will target the consumer and professional market with new audio and video products.

Harman’s workforce, headquarters and facilities will be retained, and its consumer and professional audio brands will still be produced. Harman will operate as a standalone Samsung subsidiary, with a board of directors overseen by Young Sohn. Dinesh Paliwal, the CEO of Harman.

Analyst Comment

This is the biggest acquisition that Samsung has so far made. There are some obvious immediate benefits – Samsung is already offering ‘AKG’ audio and it will prestige brands including Bowers & Wilkins, Harman Kardon, Invinity, JBL, Lexicon, Mark Levinson and Revel. Using a lot of different brands in a single category is not something that Samsung has done up to now. Many years ago, Samsung’s trading division had a brand, Samtron, that competed in the monitor market and there was conflict and confusion. Much may depend on whether Samsung leaves the current management in place.

samsung harman logos

We suspect, however, that the real attraction is Harman’s automotive division. In audio, Harman says that 35% of cars have Harman audio and infotainment systems. But Harman goes well beyond audio. As we reported last year from MWC, Harman has well developed technology for controlling the automatic updating of systems in automotive applications. You only have to look at the issues that VW has faced and think for a minute about the potential liability of problems with not correctly controlling or updating autonomous cars to realise that this is a big issue. We’re not specialists in automotive, but it’s clear from deals such as the Intel acquisition of Mobileye in Israel for $15.3 billion to see that there are likely to be a lot more deals before the dust settles on the shape of the autonomous car market. (BR)

Harman booth MWC 2017Harman’s booth at MWC 2017 had Samsung tablets at the entrance. Image:Meko