Samsung to buy car tech firm for $8b
seoul — Samsung Electronics announced an $8 billion deal on Monday to buy Harman International Industries, marking a major push into the auto electronics market and the biggest overseas acquisition ever by a South Korean firm.
The electronics giant previously shunned big acquisitions, and the latest deal underscores a strategic shift as the company tries to break into the high-barrier automotive industry 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 familiar with the deal told Reuters, referring to Samsung Electronics’ vice-chairman.
The purchase of the Stamford, Connecticut-based maker of connected car and audio systems is part of Samsung’s efforts to find new areas of growth as its mainstay smartphone business — scarred by the disastrous withdrawal of the fire-prone Galaxy Note 7 — slows.
Automakers already include or are developing technologies to enhance safety and provide better smartphone connectivity and entertainment systems, creating an opening for tech companies to break into a market for software, services and components.
Samsung agreed to acquire Harman for $112 per share in cash, a 28 per cent premium to the US firm’s closing price on Friday.
“Samsung is using its huge cash pile to pull ahead of rivals in the auto technology market. 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,” said HDC Asset Management fund manager Park Jung-hoon.
Harman’s products, which provide infotainment, telematics, connected safety and security services, are used in more than 30 million vehicles made by automakers such as BMW, Toyota Motor and Volkswagen, according to its website.