Harman (HAR) To Be Acquired By Samsung For $8B In Cash
Zacks Investment Research | Nov 13, 2016 08:23PM ET
Harman International Industries, Incorporated (NYSE:HAR) is being acquired by Asian giant, Samsung Electronics (KS:005930), in an all cash deal worth $8 billion (or $112 per share representing 28% premium to Nov 11, 2016 closing price). Following the takeover, Harman will function as an independent unit with CEO Dinesh Paliwal retaining his responsibilities.
The acquisition, which is anticipated to close by mid 2017, has been approved by both the companies. It now awaits shareholders’ approval.
Reportedly, if all goes well, Harman will be the biggest acquisition by Samsung, whose business is reeling under the recent Galaxy Note 7 fiasco. Adding to troubles, the company had to recall a batch of its washing machines anticipating explosion.
Of late, there has been tremendous interest in the auto sector as behemoths like Apple (NASDAQ:AAPL) , Alphabet (NASDAQ:GOOGL) , and Tesla (NASDAQ:TSLA) pumping ample resources in developing self driving car technology. Samsung has long been trying to enter the automotive space. Therefore, the acquisition of Harman, an already established player in the arena, makes complete sense.
Per the press release, Harman reported $7 billion in revenues for the year ended Sep 30, 2016, out of which nearly 65% were automotive related. It also added that 30 million vehicles across the globe are equipped with its connected car and audio systems. More importantly, the order backlog stands at an impressive $24 billion.
Samsung’s CEO was quoted 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. As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognized portfolio of best-in-class products, HARMAN immediately establishes a strong foundation for Samsung to grow our automotive platform.”
Samsung has said that its Automotive Electronics Business Team, created in 2015 to explore business opportunities in the automotive sector, will now assist Harman.
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