By Kang Seung-woo
Samsung Electronics announced Saturday that it has completed the acquisition of Harman International Industries.
The $8 billion (9.2 trillion won) deal is expected to help the Seoul-based company establish itself as a significant presence in the rapidly growing connected car market.
This marks a success for Samsung, which was in need of a turnaround from the arrest of its vice chairman and setback over the global recall of its flagship Galaxy Note 7, observers said.
Samsung welcomed the deal, describing it as a “historic moment.”
“Closing this transaction opens the door to create substantial growth opportunities and deliver greater benefits for customers worldwide,” said Sohn Young-kwon, president and chief strategy officer of Samsung Electronics.
“We see transformative opportunities in cars _ and a future which seamlessly connects lifestyles across automobiles, home, mobile devices and work. In addition, the bringing together of Harman’s iconic audio brands and capabilities with Samsung’s leading display technologies will deliver an enhanced audio and video experience to consumers and professional end markets.”
Dinesh Paliwal, Harman president and CEO, also said, “We are excited to have completed the transaction, which provides compelling cash value to our stockholders, benefits for our customers and new opportunities for our employees.”
Under the agreement, Harman stockholders will receive $112 per share in cash.
When Samsung unveiled its intention last November to take over the U.S. automotive parts supplier, it drew a backlash from some Harman shareholders claiming that the price was too low.
However, the deal got approval at a shareholders’ meeting in February, followed by all the necessary regulatory approvals in the United States and certain foreign jurisdictions.
According to Samsung, the Connecticut-based Harman will operate as a standalone subsidiary, with Paliwal remaining the CEO.
In addition, Samsung is retaining Harman’s work force, headquarters and facilities, as well as all of its consumer and professional audio brands.
The deal marks the largest-ever buyout by Samsung, but it carries extra significance because it is the first major acquisition attempt since heir apparent Lee Jae-yong joined the firm’s board of directors last October.
Lee is under arrest on multiple charges, including bribery and embezzlement, due to his involvement in the corruption scandal that removed President Park Geun-hye from office last Friday when the Constitutional Court unanimously ruled in favor of her impeachment.
There had been some speculation that Lee’s arrest may have negatively affected the M&A amid reports that some executives and employees of Harman had expressed concerns about Samsung’s alleged involvement.
“The Harman acquisition will help Samsung expand its product lineup and build its client list, which will help the firm fully push forward a connected car business,” said Kim Young-woo, an analyst at SK Securities.
“Further cooperation between the two companies is expected to generate even more synergy.”
Harman is the global leader in car entertainment systems and audio equipment.