Telecommunications giant Samsung have just made their biggest acquisition yet, buying Harman International Industries, an auto parts supplier best known by consumers for its Harman Kardon audio division.
The $8 billion, all-cash deal is somewhat surprising taking into consideration that the company generally develops tech in-house. It instantly makes Samsung a much bigger player in the connected and autonomous vehicle industry dominated by Google, Apple and automakers like Tesla, GM and Volvo.
According to Harman CEO Dinesh Paliwal, Samsung's displays, connectivity and processing tech is a good fit for Harman. He said, "Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers,"
Samsung's Oh-Hyun Kwon added that Harman has an "unmatched automotive order pipeline" and a "strong foundation for Samsung to grow our automotive platform."
Before this mega-deal, Samsung's biggest acquisition was a deal to buy AST for $840 million back in the '90s.
Samsung paid a 28 percent premium over Harman's current share price, but Harman has a projected order backlog of $24 billion, according to theWSJ. While the California-based firm is known for audio products like Harman Kardon, JBL and dbx, about two-thirds of its sales come from the auto industry. The company builds infotainment, connected safety, security and telematics devices and services used in over 30 million vehicles built by BMW, Toyota, Volkswagen and other automakers.
According to reports, Samsung are trying to break into the automotive market and it seems that rather than doing things in-house they have decided to acquire instead.
Samsung has cash reserves of around $70 billion and "expects to use cash on hand to fund the transaction." The deal is set to be finalized next year.
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