Samsung has expressed its desire to buy the U.S Auto Parts Supplier Harman in a deal worth $8 Billion. While one might primarily associate Harman with the class-leading audio and infotainment systems the company is more than just that. The $8-Billion all-cash deal will be Samsung’s biggest acquisitions till date and it is a tell-tale sign of how big companies are equipping themselves with the required technology in order to brace for the future.
Harman, a Stamford-based company that started out as an audio pioneer in 1953 is known for its in-car entertainment units. In fact, the auto manufacturers make it a point to highlight the Harman audio systems in their cars. The company has been supplying to General Motors and Fiat Chrysler and it already has a backlog that is three times than its annual revenue. Needless to say, about two-thirds of its sales comes from the automakers.
Furthermore, until now Harman has been an automobile first company and this might change since it would gain access to Samsung’s expertise in 5G, cyber security, infotainment, and telematics. Harman audio systems include a bouquet of leading audio brands including JBL, Harman Kardon, Mark Levinson, AKG, Lexicon, Infinity, and Revel. These brands are expected to better Samsung’s audio offering and will help in facilitating high-end audio setups on Samsung devices.
Additionally, Samsung will also be adding 8000 software designers and engineers from Harman who are expected to work on the IoT products. Samsung seems to be more interested in the long-term benefits and as a result, will retain Harman’s workforce, headquarters and all of its brands will remain intact. The details of the deal reveal that Samsung has paid a premium of 28-percent over the existing stock price and Samsung is expected to fund the transactions with its cash in hand.
Samsung had announced last year that it would foray into electronics parts manufacturing with the focus on autonomous vehicles. In fact, LG has been building computer modules for GM’s OnStar telecommunications from quite some time.