Samsung acquires car audio firm Harman for USD 8 billion

Samsung acquires car audio firm Harman for USD 8 billion. November. 15, 2016 07:07. by Ji-Hyun Kim jhk85@donga.com.

Samsung Electronics is spending 8 billion U.S. dollars (or 9.36 trillion won) to buy a U.S.-based auto and audio product maker Harman International Industries. It is South Korea’s biggest overseas M&A deal in history.

Samsung Electronics made the decision to accelerate growth in automotive electronics industry, the next growth engine, at the Board of Directors Meeting on Monday. This acquisition was the first big deal that was made since Samsung Vice Chairman Lee Jae-yong ascended to the board of the company. Samsung and Harman have been negotiating on the M&A since September and recently announced that they have entered into a definitive agreement.

Established in 1956, Harman started to make inroads into the automotive electronics industry in 1995, and has taken the top spot of the global automotive infotainment industry with a market share of 24 percent. In-vehicle navigations and connected car audio systems are main products of the industry. But the company is expected to grow to the extent of networking the required information in real-time by being equipped with 5G wireless communications networks and speech recognition artificial intelligence (AI) in the long time.

Samsung plans to leverage the company’s expertise in 5G communications networks, OLED, AI, and speech recognition technologies, which it has accumulated in mobile and home appliances industries, and fully utilize the know-hows of Harman in automotive and connected technologies.

In the meeting, reports of the its plan on the recent demand of the U.S. hedge fund Elliott Management to increase the company’s return of capital to shareholders were made.