Attwood moves past Heineken hangover
With Harman buy, Samsung makes $8 billion bet on cars
SAMSUNG Electronics is spending $8 billion to get inside your car. Samsung, the South Korean electronics giant – which already makes popular but recently problem-plagued smartphones – said on Monday that it had agreed to buy Harman International Industries, a US automotive tech company, in an ambitious push into a whole different kind of mobile.
Harman is best known for making car audio systems under brand names popular with audiophiles such as Harman/ Kardon and JBL. But Harman’s appeal to Samsung comes from what it calls its connected car business – an operation that supplies a car’s navigation services, its onboard entertainment systems and its connectivity to the rest of the world.
“The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade,” Young Sohn, president and chief strategy officer of Samsung Electronics, said in a news release.
The deal marks the latest ambitious foray by an established name in the technology world into a new generation of smart objects sometimes collectively called the Internet of Things. Under this vision, everything from home security systems to refrigerators will be connected to the internet, gathering data and controllable at the touch of a smartphone icon.
Much of that focus has come down to cars. Last month, US chip maker Qualcomm agreed to acquire NXP Semiconductors for $38.5 billion, which would give it a presence in the market for making a new generation of chips for smart cars.
With cars likely to get more screens and more computers, the purchase gives Samsung a stake in what could be an industrywide boom. It also could provide insight for the company’s varied components businesses. Samsung can learn first-hand from Harman what it needs to do to sell its screens, chips and memory to carmakers.
Other major technology names are also betting on mobile and smart gadgets. In July, SoftBank of Japan struck a deal to acquire ARM Holdings, a British chip designer with a focus on mobile devices, for $32 billion. Last year, Avago Technologies bought Broadcom, which provides chips for the Apple iPhone, for $37 billion.
It is far from certain whether those technologies will end up being the ones that power the smart gadgets of tomorrow. Apple and Google have expressed interest in developing cars, while traditional automotive suppliers have also looked to move up the value chain.
Samsung’s $112-a-share offer for Harman represents a 28 percent premium from where its shares traded on Friday, but that is still well below the roughly $145 that each Harman share was fetching early last year. Harman’s results from its professional solutions business – which makes sound and lighting for concerts and other events – have weakened. The company has said it will work to bring the operations back to their previous strength.
Samsung has largely benefited from the new mobile world, as growing demand for smartphones bolstered sales of its displays and microchips. But the company has faced difficulties selling its own branded phones, including a drop in market share, as Apple captured more of the high end and a new generation of low-cost Chinese manufacturers increased pressure on the bottom.
The company regained some ground with the Galaxy 7 line of curved phones. But last month, in an embarrassing turnabout, it discontinued its new, premium Galaxy Note 7 after several caught fire. The stumble wiped $2 billion off its profit and cast a shadow over the Samsung brand name.
The deal for Harman is a rare one for Samsung, which keeps tight control of its supply chain – often owning its suppliers outright – and has mostly eschewed big deals to fill in holes in its portfolio.
Samsung said that it would also have access to Harman’s designers and engineers, which would allow for more collaboration. It did not give details on what sorts of services they would aim to build together.
It said that Dinesh Paliwal, Harman’s chairman and chief executive, would continue to run the operation, and that it would keep the company’s facilities.
The deal is expected to close in mid-2017. SALES of Thai and Americanowned beer brands have helped distributor Attwood ImportExport Group deepen its penetration of Cambodia’s premium beer market and offset the loss of its Heineken distribution rights, the company’s chief executive said yesterday.
Attwood announced in September that it had inked a deal with Anheuser Busch InBev, the world’s largest beverage company, for the exclusive right to import Budweiser to the Kingdom. It has also secured rights to distribute InBev brands Corona and Becks, as well as Thai beer Chang, since losing i t s licence t o di s t r i bute Heineken in a messy dispute two years ago.
The firm lost the lucrative Heineken contract after holding a monopoly on the Dutch lager for 17 years. Heineken Asia-Pacific awarded the distribution rights to Cambodia Brewery Limited (CBL) following its full acquisition of the local brewery, which also produces Tiger and Anchor beer.
Attwood CEO Tan Ser Chhay said beer distribution rights acquired since losing the Heineken contract, particularly for Budweiser, have made up for the loss of sales.
“Right now, volume-wise, I would say we have already caught up to Heineken beer with sales of Budweiser, Corona and Chang,” he said. “I would say Budweiser [accounts for] about 40 to 50 percent of our beer imports.”
Chhay said Attwood would look to develop its current brands, though could consider adding additional products from InBev’s portfolio, which includes Foster’s, Leffe and Stella Artois.
“We will not sign with any other beer company because we have an exclusive deal with Anheuser Busch InBev, so if we were to do any new product it would be in a different category or maybe in something within that portfolio.”
In addition to beers, Attwood holds distribution rights for well-known liquors including Hennessy, Johnnie Walker and Tanqueray.
“Going forward we will concentrate on beer and whisky, but we are also looking forward to focus on our products and maybe move into importing non-alcoholic products,” Chhay said.